YVONNE FOVARGUE MP

FIRST PUBLISHED BY:  PARLIAMENTARY COMMUNICATIONS LTD

COUNCIL TAX CHANGES WILL HIT THE WORKING POOR

The government's proposal to localise Council Tax benefit (CTB) while cutting funding by 10 per cent will hit hardest the working poor, writes Yvonne Fovargue MP.  This reform is part of the decentralisation agenda and its aim is to create stronger incentives for councils to get people back into work and so support the work incentives that will be introduced through the government's plans on universal credit. 

The communities and local government select committee expressed scepticism over the level of local control that councils will actually have saying, 'the proposals for the localisation of Council Tax support seem to us to provide an illusion of delegation with a minimum of real discretion, virtually guaranteeing that the funds available to support working-age unemployed people will be squeezed'. However, the decision to abolish the national CTB from 2013-2014 and instead provide local councils grants to create their own systems will leave them struggling to design replacement schemes. Government has proscribed that existing and future pensioners are protected at current levels leaving no discretion in this area and in determining a scheme councils must also leave untouched the single persons discount. 

Therefore the cash funding cut, which equates to £2.6million for my local authority, Wigan in Greater Manchester will fall onto 18,000 local working-age households, already struggling against a backdrop of the current difficult economic conditions. The 10 per cent cut in the £5bn spent on CTB means that local authorities need flexibility to target support to the poorest and most deserving in society. Government inflexibility poses the danger that those on higher incomes will receive discounts at the expense of the needy. 

The timescale to completely redesign the existing scheme, consult, agree, put in place the administrative process and ensure that IT can deliver the scheme is very tight. Existing working age customers receiving CTB will see a reduction in amounts awarded – before any protection is applied for locally defined vulnerable groups. There is a potential for reductions in collection rates for Council Tax – Council Tax will need to be collected from customers who are receiving a decrease in their existing Council Tax benefit – this could be the first time that some people have had any liability to pay. Collection could be difficult and involve high levels of direct contact to recover the debt. 

This change compounds the effect of other welfare reforms. Households renting in the private sector will have seen a reduction in their housing benefit by December 2012. There are further reforms to housing benefit due in the social sector in April 2013. Local authorities will have to design schemes where very difficult decisions will have to be taken about caps on entitlement, minimum awards, amended capital limits and income tapers and even changes to disregarded income (child benefit, war pensions), or find money from within existing resources to plug the shortfall – politically difficult and at odds with child poverty strategies. 

Hard working families are already squeezed, councils are squeezed and it is inevitable that, yet again, the poor and vulnerable will suffer at the hands of this government.

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

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NEW PROPOSALS MEANS SOME KINGSTON RESIDENTS COULD BE FORCED TO COUGH UP MORE COUNCIL TAX

FIRST PUBLISHED BY: THIS IS LOCAL LONDON

COUGH UP MORE COUNCIL TAX UNDER NEW PROPOSALS

Landlords, second home owners and more than 400 residents of working age could be forced to cough up more Council Tax under new proposals. Kingston Council’s new Council Tax benefit scheme aims to charge higher rates to those who can afford it, while protecting the elderly, disabled and vulnerable in a bid to make up a £1m shortfall.

The deficit comes after central Government decided to abolish the national Council Tax benefit scheme and cut funding by 10 per cent by April 1 next year, leaving the local authority in the lurch. Currently 9,600 Kingston residents are claimants of Council Tax benefit, that is means tested and helps people with low or no income to pay their Council Tax.

The plans aim to encourage people to work by rewarding those who do, while still protecting people on low incomes who are already struggling to make ends meet.Under the new scheme £100,000 will come from 400 people of working age who live with other working adults and will be asked to contribute more. The rest of the shortfall will be met by removingCouncil Tax exemptions and discounts on certain properties, including those that are not occupied as a main home. An empty homes premium of 50 per cent will also be charged on properties left empty for more than two years.

Councillor Rolson Davies, lead member for finance and resources, said: “We understand that our proposals will not be popular with those who we would be asking to pay more, but we have a responsibility to protect those who are vulnerable, including those people relying on our frontline services.” Tenants may have to pick up the shortfall after changes to Council Tax benefits, according to Chris Norris, head of policy at the National Landlords Association (NLA).

However, Mr Norris said good communication with both groups and the council could minimise any negative effect. He said: “Landlords will be keen to sustain long-lasting tenancies, so it is important that tenants and landlords work together to agree the best way to continue rent payments and sustain their tenancies.”

Pippa Mackie, chief executive of Kingston citizens advice bureau, said one problem area could be for former owners of repossessed houses, as building societies will be taxed after repossession and they could try and pass the cost on. She said: “I think that most people who are reliant on welfare benefit are concerned about the impact that changes might have on them. “There are going to be changes which may cause confusion so we will be working to make sure that as much information as possible is out there.” People who are of pension credit age or who are receiving a disability related benefit will not be affected by the changes.

A consultation on the proposed changes will start on July 2 and run until September 9, before being considered by the council’s policy and resources committee and full council in December.

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

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LGA DEMANDS CONTROL OVER COUNCIL TAX RULES

FIRST PUBLISHED BY: LOCAL GOVERNMENT CHRONICLES

THE GOVERNMENT MUST SCRAP BLANKET COUNCIL TAX DISCOUNTS OR THE POOREST WILL FACE HUGE BILLS.

That warning has come from the Local Government Association, which said more than two million people who are either low earners or young and unemployed could have to pay an average of £247more in Council Tax each year. Control of entitlement to the benefit is due to pass to councils next year. But the government will impose a £500m cut, equivalent to 10% of the total available.

And it has ordered that discounts cannot be reduced for single people regardless of income or for currently eligible pensioners, as well as suggesting that vulnerable groups such as families with children should be protected from any reductions. Ministers have claimed that councils could make up the shortfall by cutting discounts for second homes and empty properties.

But LGA chair Sir Merrick Cockell (Con) rejected this: “The poorest regions and the most vulnerable people will be hardest hit by this cut unless the government offers councils more flexibility over all forms of Council Tax discount. “It is the only way that councils can ensure that the greatly reduced funding for Council Tax benefit is targeted at the local people who need it most.” Without this, the £500m cut would prove “impossible to deliver” except through service cuts, higher overall tax rates or the higher charge for working poor people and the young unemployed, he warned. Sir Merrick added: “The Treasury has made the cut and left councils to make incredibly tough decisions and face the inevitable fallout.”

The LGA arrived at its £247 figure by taking Department for Work and Pensions statistics, published only at UK level, which show 5.9 million Council Tax benefit recipients, of whom 2.2 million are aged 65 or over and 1.7 million are families with children. The first group must be protected, and it has assumed that councils would wish to protect the second, leaving 2.0 million working age benefit recipients to share the £500m cut, an average of £247 each. For England, the figure would be roughly £210. David Magor, chief executive of the Institute of Revenues, Rating and Valuation, said: “The shortfall in England will be £437m, and the government has said second and empty home discounts could be worth some £420m. “The trouble with that is that it is ‘lumpy’ at local level. If you have not got many second homes you will have to cover the gap from something else.”

Councils in places such as the south west, with both low income levels and high numbers of holiday homes, might make the equation work, but those in older industrial areas could struggle, he said. Local government minister Bob Neill said: “The government has no intention of letting councils abolish vital discounts like those for single person homes.

“Spending on Council Tax benefit has more than doubled since 1997. The Local Government Association needs to realise that councils accounts for a quarter of all public expenditure and they need to play their part in tackling the deficit.” He added: “We are giving councils a strong incentive to put in place a better and fairer local Council Tax support scheme based on local priorities that means they can help more residents get back into employment, protect the vulnerable and reduce the spiralling benefits bill.”

The Local Government Finance Bill, which would give effect to the changes in Council Tax benefit, is due for debate in the House of Lords this evening.

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

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£2BILLION OF COUNCIL TAX LEFT UNCOLLECTED BY TOWN HALLS WHO THEN MOAN ABOUT CUTS BY WHITEHALL

FIRST PUBLISHED BY: THE MAIL ONLINE

COUNCILS IN ENGLAND HAVE FAILED TO COLLECT BILLIONS IN COUNCIL TAX – WHILE COMPLAINING ABOUT CUTS TO THEIR BUDGETS FROM WHITEHALL.

The total arrears – much dating back several years – is spread across 31 local authorities and stands at £2.3billion. Eight out of the ten councils with the worst record on collecting Council Tax are Labour-run. Liverpool had the highest amount of arrears, with nearly£108million in Council Tax outstanding – about £500 per household in the city.

Biggest debts: Liverpool City Council is owed £108million in unpaid Council Tax. Earlier this year, the city’s Labour leader Joe Anderson said he was ‘so angry and so devastated’ that the council had to find £91million in savings. 

That amount is less than the total in uncollected Council Tax. 'Angry': Liverpool's Mayor Joe Anderson was 'devastated' the council had to make savings in other areas to make up the shortfall. Manchester’s plans to cut services were criticised last year by David Cameron when he told the Labour-run local authority it should first cut its chief executive’s £200,000 salary. Labour regained control of Birmingham from the Tories and Lib-Dems in May and Croydon, also among the ten with the worst record, is controlled by the Tories. Local government minister Bob Neill unveiled the figures in a parliamentary answer to Labour MP Helen Jones. He said: ‘Every penny of Council Tax that is not collected means a higher Council Tax for the law-abiding citizen who does pay on time. 

‘These figures show that there is a significant source of income which councils could use to support frontline service or cut Council Tax bills.’ Lambeth, which has £48million of uncollected Council Tax, last year used taxpayers’ money to fund a poster campaign complaining about central government spending cuts. The posters said: ‘The Government has cut our money so we are forced to cut services.’ The Government has ordered a freeze of Council Tax across the country and has refused to pour in more cash to profligate councils.

'Shameful': Secretary of State for Communities and Local Government Eric Pickles accused local authorities of squandering millions by failing to collect Council Tax Local authorities have also expressed outrage over the Government’s 28 per cent cut to their funding. But Local Government and Communities Secretary Eric Pickles yesterday hit back, saying: ‘This roll call of shame is familiar reading, with Labour councils year in year out topping the table of local authorities who squander millions by failing to collect our Council Tax.

‘If these Labour authorities stopped complaining about the legacy of cuts left by their own party and actually chased upCouncil Tax dodgers they could use the money to protect hundreds of frontline jobs.’ The worst collection rate in England for last year was the London borough of Newham, where 8.3 per cent of Council Tax was not paid. It was followed by Manchester, Salford and the London boroughs of Southwark, and Barking and Dagenham. In total, £612million of Council Tax was not collected in 2010-11 across England.

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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GOVERNMENT RULES OUT ENGLISH COUNCIL TAX REVALUATION

FIRST PUBLISHED BY: BBC

COUNCIL TAX BANDS IN ENGLAND HAVE NOT BEEN REVALUED FOR 17 YEARS

There will be no revaluation of Council Tax bands in England during this Parliament, the government has pledged. It means there will be no rise in local taxes for householders based solely on the increased value of their homes. Every property in England is in one of eightCouncil Tax bands, depending on value, and these were last set in 1993. The government said Labour had been "actively planning" to carry out a revaluation but Labour said its election manifesto had promised not to.

'Financial worries'

A revaluation was long overdue, but would prove highly unpopular with householders who found themselves in a higher band and therefore paying more in Council Tax, said the BBC's Greg Wood. A revaluation in Wales in 2005 placed about a third of all homes there in a higher band. The government says that a rise from Band D - the benchmark for Council Tax - to Band E would cost an extra £320-a-year. The former Labour government had planned to revalue Council Tax bands in England in 2007, but announced in 2005 that it would postpone the decision until after the next general election.

It said the delay was to allow the issue to be considered as part of a wider inquiry into local authority funding, but some commentators said at the time that the decision was also a reaction to the anger sparked by the Welsh revaluation. Local Government Secretary Eric Pickles said the key thing was the relationship between the upper and lower bands of the tax, and they were roughly the same as when the tax was introduced.

"I've always argued against a revaluation because we know from what happened in Wales that it tends to hit poorer families. Given that the bands are roughly in the same position as when Council Tax was first introduced then it seems to me to be a matter of fairness that we don't impose an additional level of taxation, £1,600 during this Parliament, on ordinary families."

But a Labour spokesman said: "The Labour Party made an unequivocal commitment that there would be no Council Taxrevaluation in this Parliament.  "This is a cynical and misleading manipulation of facts based on what was ultimately a routine updating of the Valuation Office Agency's records." The Taxpayers' Alliance, which campaigns for lower taxes, said families would be relieved there was to be no revaluation. "Council Tax has doubled in the last 10 years while many services have been scaled back, executive pay has spiralled out of control and charges have increased; it's time Council Tax was cut," spokesman Emma Boon said.

"What's been happening is that where local councils have looked at trying to find other ways of charging people, it's just simply meant other taxes... charging people for throwing away more rubbish or fining people and things like that." Colin Barrow, leader of Westminster City Council, said councils would welcome the move as a "positive step" that would "end uncertainty" for many Council Tax payers and local authorities.

"It allows the government to concentrate on creating a fairer and more responsive financial system, reflecting the differing needs of each area.  "We, for instance, would refer to the special problems of poverty in Westminster alongside the responsibility we have to keep the city clean for millions of visitors every day," he said. What band a house falls into is determined by inspectors from the government's Valuation Office Agency (VOA). There has been criticism in the past from some quarters over what data about people's homes is collected and kept by the VOA.

Mr Pickles said the government was moving to address this issue, and that an independent data audit of the VOA would protect privacy and civil liberties as part of dismantling the "database state". The Scottish Parliament has no plans to revalue homes in the foreseeable future. In Northern Ireland, which has a different system of local taxes, property values were reassessed in 2005.

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 yourCouncil 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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