ELDERLY SNARED BY INTEREST TRAP:

FIRST PUBLISHED BY: THE IS MONEY

PENSIONERS LOSING RIGHT TO PENSION CREDIT AND COUNCIL TAX BENEFIT BECAUSE OF RATE CUTS

Pensioners on low incomes are losing their entitlement to both Pension Credit and Council Tax Benefit because of the savage interest rate cuts. Many are being left hundreds of pounds a year worse off after the Bank of England base rate was slashed from 5.5 per cent to 2 per cent in 12 months. Huge rises in Council Tax bills have already placed a strain on the budgets of thousands of pensioners. 

Protest: Pensioners already face huge increases in Council Tax 

When calculating Pension Credit for those still repaying a mortgage, the Government assumes home loan costs are 1.58 percentage points above base rate. Thus as the headline rate of interest has fallen this year, so have allowances to cover mortgage costs. And as a result, because the Government assumes that pensioners now have more disposable income, they lose other benefits, too. 

This includes those stuck on fixed-rate deals that have not seen any fall in their repayments. Pension Credit is made up of two parts the first being Guaranteed Credit. This tops up weekly incomes for the over-60s to £124.05 for single people and £189.35 for couples. When calculating these benefits the Government includes all income and takes into account how much is spent on housing costs. Over 65s on low incomes can also qualify for Savings Credit worth up to £19.71 a week for singles and £26.13 for couples. This is designed to reward people for saving. 

Those that receive Guaranteed Credit receive the bonus of full Council Tax Benefit from the Government  -  meaning they don't have to pay Council Tax. But those who receive only Savings Credit get reduced Council Tax benefit. Peter Phillips, 71, and his wife Phyllis, 69, are worse off to the tune of £121.36 a month because of the Government's skewed assumptions. They have a seven-year fixed-rate mortgage at 4.6 per cent, with monthly repayments of £457. 

Originally their allowance for housing-cost was £101.14 a week. They were also entitled to 58p a week Guaranteed Credit. Crucially, it also meant they were entitled to the full £26.13 per week Savings Credit  -  and full Council Tax Benefit.  On May 19, 2008, after just one base rate cut, his mortgage rate was assumed to have reduced from 6.83 pc to 6.58 pc. This meant the DWP recalculated their housing costs as £97.44 per week. 

In one swoop they lost entitlement to both Guaranteed Credit, because assumed disposable income had pushed them up above the benefits threshold. It also meant a reduction in both their Council Tax Benefit and in Savings Credit of almost £20 a month. 

They immediately had to start paying Council Tax of £69 a month.

Mr Phillips, from Stoke-on-Trent, says: 'It's disgraceful that we pensioners are being penalised in this way. I can't afford this.'  His latest statement shows his savings credit has plummeted to £13.04 a week, after he was moved on to an assumed rate of 4.58 per cent making him £121.36 a month worse off overall. 

Fortunately he should receive compensation for this latest drop in income. Yet sadly he will still be £89 a month worse off because of the earlier rate falls. The Government announced in November that it would freeze the rate at 6.08 per cent for six months to stop more people losing benefits. Any losses to benefits incurred when the base rate fell to 3 per cent in November and the assumed rate fell to 4.58 per cent.

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

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COUNCIL TAX SNOOPERS COULD SELL YOUR DATA

FIRST PUBLISHED BY: THIS IS MONEY

THE GOVERNMENT IS CONSIDERING SELLING OFF DETAILED INFORMATION ABOUT PEOPLE'S HOMES GATHERED BY COUNCIL TAX INSPECTORS.

Who is watching YOU?

Officials have discussed plans to sell details about the size and condition of households, the number of bedrooms and parking places --and even whether they contain more than one bath - to insurance and mortgage companies.

The Government has also discussed allowing thepublic access to their neighbours' records. The plan will cause outrage among homeowners and liberty groups already angry at Government plans for a new Council Tax valuation system that would give inspectors the right to enter any home and look for 'improvements' which could be used to increase rateable value. And it comes just months after this newspaper exposed how the DVLA was selling off drivers' personal details to car-clamping firms.

The plan was last night blasted, the Government was forcing people to reveal personal information, then profiting from it. Local Government Minister Eric Pickles said: 'This is just the latest disturbing development in the Government's plans for Council Tax inspections. We've maintained from the start that the collection of such detailed information would create a significant temptation to sell it off. The Government should be protecting people, not exploiting them.'

The proposed information sell-offfollows the Government's decision to purchase an American ' computer-assisted mass appraisal' system, which allows tax assessors to pinpoint households on a computerised map and list information gleaned from house-to-house inspections. It will include details of home improvements, number of rooms and their sizes, gardens and even views. The programme then calculates the Council Tax. The £45m database - the largest of its kind in the world --was bought from American firm Cole Layer Trundle.

Patrick O'Connor, who set up the database, said British officials had been 'very interested' in marketing the information. He revealed that he had discussed the proposals with a senior civil servant responsible for tax revaluation. 'I think he is very interested,' said Mr O'Connor, who explained that selling the information would help cover the cost of the revaluation. 'If they could sell the data, they could supplement the cost,' he said.

Mr O'Connor added that there was 'quite a bit of money' to be made. 'In Ontario they have been selling verification of an address and improvements for £2.30 a hit. They could make real money.' The new database, was initially meant only forCouncil Tax purposes but it has already been extended to cover capital gains tax and inheritance tax.

Last week a delegation from the Valuation Agency Office, including Mr Brankin, revealed the scale of the project to a conference held in Disneyland, Florida. Mr Brankin admitted his team of 13,000 staff had already valued more than ten million properties at a cost of 'hundreds of millions of pounds'. He said the country had been split into 10,000 'localities', allowing assessors to take into account the quality of the area for the first time.

A VAO spokesman said: 'There are no active discussions about whether we will market the information. We don't even know that the revaluation will take place.

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

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SOUTH 'WORST HIT BY BIG COUNCIL TAX RISES'

FIRST PUBLISHED BY: THE IS MONEY

COUNCIL TAX HAS RISEN UP TO THREE TIMES FASTER IN THE SOUTH THAN IN THE NORTHERN TOWNS.

In the most tightly squeezed cities and districts - mainly Conservative controlled areas - the Council Tax burden has gone up by more than 150% in a decade. But the most favoured cities have seen the tax they pay go up by only 50% since the party came to power in 1997.

The breakdown comes from figures disclosed by ministers in parliamentary questions, which show how much money has been collected by different town halls. Lowest increases in Council Tax receipts have come in Liverpool, where the take went up just 49% between 1997 and 2007. 

Redcar in the North East, St Helens on Merseyside, and Tameside in Manchester also received low amounts of extra tax from their residents. But other places saw comparatively huge amounts of money handed over to town halls. In the City of London, receipts rose by 206%. Outside London there were increases above 150% in parts of Cambridgeshire and Devon. A string of councils saw their collection level go up by more than 140%

Labour has been accused of giving extra subsidies and grants to northern towns and cities, which allow them to keep local taxes down. Tories, who obtained the information through Westminster questions, said yesterday that Labour has been favouring its own voters. Local Government Secretary Eric Pickles said: 'Everyone has faced soaring levels ofCouncil Tax, with homes across the South and East Anglia being clobbered the most.

'The police levy on Council Tax is going through the roof, but police numbers are being cut. Local services like weekly rubbish collections are slowly being cut, while bills rise year on year. People are paying more and getting less.' The: Is It Fair? Council Tax protest group, said: 'If you live in the country, prices are much higher and you get squeezed every time. Council Tax bills are just part of the pattern.'

The evidence of differentials between towns and country and the North and South is likely to become a key campaigning issue in the local elections at the beginning of May. An increase of 140% would mean Council Tax receipts went up by more than ten times the level of inflation. According to the Government the preferred measure, the consumer prices index, inflation went up by 14% between. Last year, research showed that taxpayers in the South are effectively subsidising higher public spending.

Two reports found that the South-East bankrolls the rest of the country but gets fewer policemen, worse health services and shabbier care for the elderly than anywhere else. Studies by the consultancy firms Local Government Futures and Oxford Economics showed that each person in the South East pays the Treasury nearly £2,000 more than they receive back in public spending on services such as schools, hospitals and infrastructure projects.

Under the new system of judging what Treasury grants should be paid to local authorities, councils in areas judged poor and needy have been getting much higher amounts.

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

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A £136M APARTMENT, BUT THE COUNCIL TAX IS BELOW THE NATIONAL AVERAGE

FIRST PUBLISHED BY: THIS IS MONEY

THE RICH GET RICHER

Owners of apartments in the luxury One Hyde Park development in central London the most expensive of which sold for £136 million to Ukrainian mining tycoon Rinat Akhmetov will pay just £755.60in Council Tax to Westminster Council for the year 2011-12.

Residents will pay an extra £619.64 to the Greater London Authority, but the total annual charge of £1,375.24 will still be less than the average tax paid on a band D property in Britain. This is £1,397.51, according to figures compiled by public sector accountancy group CIPFA.

Westminster Council's Labour opposition leader Paul Dimoldenberg said: 'It's extremely unfair that some of the wealthiest people in the world should pay below average Council Tax.' Luxury: The total annual charge will be less than the average band D property. The Liberal Democrats have suggested that the most valuable properties should be subject to a separate 'mansion tax'.

Westminster's charges are low because the council raises £50 million a year in West End parking charges. Its Council Tax is the second-lowest in Britain after Wandsworth, in south-west London. Westminster council leader Colin Barrow said: 'We have frozen Council Tax for the past four years, putting money back into local households.'

He added that the council was getting more cash from the block now that it was residential rather than an office space, since business rates go largely towards central government. The Candy brothers, who developed One Hyde Park, said that some residents have already moved in, contrary to suggestions from Westminster Council that nobody was living there yet. Most buyers own their flats through offshore company structures, allowing them to avoid stamp duty.

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

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INFLATION-BUSTING COUNCIL TAX RISES AHEAD

FIRST PUBLISHED BY: THE IS MONEY 

COUNCIL TAX BILLS WILL GO UP BY MORE THAN 4% THIS YEAR, IT EMERGED YESTERDAY.

The rise, which is 50% above the rate of inflation, will mean that local taxes will have all but doubled. Local government officials confirmed yesterday that estimates putting the spring increase at less than 4% were too low. Ministers had hoped that large dollops of Treasury cash given to councils had kept the lid on increases.

Town halls last night blamed the Government for the impending hike and one official warned: 'There will be more pain than people had anticipated.'

Lord Bruce-Lockhart, head of the Local Government Association, said: 'Government grants have failed to keep pace with the demands placed on local government, including coping with the needs of an ageing population and the costs from new legislation. 'Now is the time for Government to be honest about what it is prepared to fund in the future and what impact this will have on local services and the Council Tax payer.'

The Department of Communities and Local Government is expected to announce a figure of 4.2% at the end of next month. The Chancellor favoured measure of inflation, the consumer price index, stood at 2.7% in January. An average bill in England would go up by £44 to £1,100. In 1997 the figure was £564.

The benchmark band D Council Taxpayer would have to find £1,321, up by £53 and, over the decade, a 92% increase. The elderly have suffered the most from higher bills, largely because many have good-sized homes in highly-taxed areas while having to make do on fixed incomes.

Two supporters of the pressure group Is It Fair will be in court this week for non-payment of Council Tax.

Spokesman Christine Melsom said: 'Once again the Council Tax rise will be order to meet Council Tax demands. One in 12 had cut back on heating. Charity finance expert Anna Pearson said: 'This injustice is made worse by the fact that despite the increases in Council Tax, many older people are seeing the services they rely on most facing cutbacks.'

Tory local government spokesman Caroline Spelman said: 'Council Tax bills are now edging closer and closer to being double what they were when Labour came into power and every year brings a nasty shock as higher and higher bills arrive. 'An increase of 4.2% is the equivalent of £110 a month out of someone's pension or take-home pay.'

The property revaluation could leave many owners paying even more in Council Taxes. A report into local government finances is due this spring.

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

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GREEN PROPOSES COUNCIL TAX RISE ‘FOR TOUGH TIMES

FIRST PUBLISHED BY: THE ORACLE

GREEN PARTY LEADER ROB WHITE ASTONISHED FELLOW COUNCILLORS ON MONDAY BY CALLING ON THEM TO PUT UP COUNCIL TAX.

The minority Labour administration is proposing a zero Council Tax increase, but needs the support of one of the other parties for it to be passed. Cllr White cast aside the tradition which puts off debate on the budget to the full council meeting – this year on Tuesday, February 21.

Leader of the council Jo Lovelock was reluctant to call on him to speak at the cabinet meeting, citing “tradition” and the need to avoid debating the budget twice. Promising he would only take a minute, Cllr White pressed on, saying these were “extraordinary times”. He described the £3.4 million grant from Government to pay for the Council Tax freeze as a “bribe”.

He proposed a 3.5 per cent increase in Council Tax, which would cost each household 87p a week. After the meeting Cllr White acknowledged his proposal might not be much of a vote winner “but it is the right thing to do”. He explained his thinking, quoting from a consultation document produced by the council’s education and children’s services department: 

“We need a fair budget for tough times".

The council is facing unprecedented cuts to its funding and is proposing to reduce services and cut staff in areas such as special needs transport, learning disability support and respite care. “In the staff consultation, learning difficulties managers said that ‘the service level cannot be maintained’.

“In school improvement, responses included that cuts would ‘push work from the administration staff to others’, overloading them. “In safeguarding, officers said ‘there is no longer capacity to provide effective maternity and sickness cover’ and most worryingly of all is that the good work completed since the service was deemed inadequate in 2008 ‘will be lost’.

“We think that this is unfair, unacceptable and as we said in our manifesto last year, we think public services are important and we will defend them. “For 87p per week – not per head, but per household – it is possible to limit this damage in the coming budget and to avoid finding ourselves in a massive hole next year.”

He continued: “We understand these are difficult economic times and so we feel that an increase in Council Tax has to be modest and below inflation. “This applies not just this year, but next year too, whereas a freeze this year would need a massive hike next year to make up lost income.

“This will also allow us to defend jobs and support the local economy. “Twenty-seven councils around the country, including 11 which are Conservative controlled, as well as the Greens in Brighton, are also raising Council Tax instead of taking the one-off freeze money. “We want Reading councillors to consider this option.” The budget contains cuts and increased fees totalling £12.6 million and the loss of around 30 posts.

If the Greens do not support the Labour administration, the ruling group will have to look to either the Liberal Democrats or the Tories for support. Cllr Lovelock said yesterday she had so far arranged meetings with Cllrs White and Daisy Benson, the leader of the Lib Dems, to discuss the budget before next week’s meeting.

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

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CALL FOR CLARITY ON COUNCIL TAX 'CONFUSION'

FIRST PUBLISHED BY: LOCAL GOVERNMENT CHRONICLES

OFFICIAL GUIDANCE ON COUNCIL TAX REFERENDUM

Calculations have been described as “confusing” and ministers have been asked to issue a clarification. Some finance directors have warned the new rules on Council Tax could see authorities trigger a referendum even if they put up Council Tax by less than 3.5%.

The issue centres on the government’s decision to calculate increases based on the “relevant basic amount of Council Tax”, which excludes from the Council Tax requirement the ‘levies’ councils pay to outside bodies such as the Environment Agency or the London Pension Fund Authority, rather than “basic amount of Council Tax”, which is the amount charged to residents of the borough.

The LGA’s Special Interest Group of Metropolitan Authorities has suggested that the approach which is a complete change on previous the previous method of calculating tax rises – could hit councils with larger levy payments than others, such as those who have set up joint delivery bodies with neighbours for services such as transport and waste.

Sefton and St Helens MBCs, which both pay a levy to the Merseyside Waste Disposal Authority, have calculated they would trigger a referendum with increases of around 2% while Tonbridge & Malling BC have calculated their trigger point would be “a fraction over 2.9%” because of drainage board levies. “We have been to DCLG about it and we got what I see as a rather confusing answer from them,” Stephen Jones, the LGA’s head of finance, said.

Former local government minister John Healey has called on Mr Pickles to clarify how the referendum system is to work. “The new system is beset by confusion and uncertainty. A clear public statement of the way the system works is essential and urgent,” he said. “In practice the trigger point for a referendum will not be 3.5%, it is likely to be lower and to be different in every local authority,” he said.

At a conference last month, Steve Freer, chief executive of the Chartered Institute of Public Finance and Accountancy, said the levies problem “just demonstrates how complicated and complex” the situation is. However, the body believes the exclusion of levies is the right approach in order to avoid councils triggering a referendum simply because a levying body increased its charge.

DCLG argues the removal of levies from the calculation is justified because a reduction in any levy on a council should be passed on to Council Tax payers. In effect, this means that councils which experience a reduction in levy payments cannot chose to reinvest that saving in services without it lowering the amount by which it can raise its Council Tax.

In a letter to Mr Healey, housing minister Grant Shapps wrote: “If, instead of taking the burden of a levy off taxpayers when that levy is reduced, an authority chooses to increase its own expenditure to “soak up the slack”….a referendum would then be required, and I am entirely happy that this outcome is justified.”

DCLG has also sent councils a note warning them to check their calculations carefully: “Authorities which are planning a Council Tax increase just below the [threshold] should take care to ensure that they do not inadvertently increase their relevant basic amount of Council Tax by marginally more this level.”

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

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