2M STRUGGLE WITH COUNCIL TAX

FIRST PUBLISHED BY THIS IS MONEY

THE COUNCIL TAX SYSTEM WAS UNDER FIRE TODAY AFTER A STUDY FOUND MORE THAN TWO MILLION HOUSEHOLDS STRUGGLING TO KEEP UP WITH THEIR PAYMENTS.

Ruthlessly snatched back in local taxes

The Conservatives said it had turned into "the ultimate stealth tax", while Help the Aged said local taxation based on property values, instead of ability to pay, was inherently unfair. According to a report commissioned by the Joseph Rowntree Foundation, those on low incomes are particularly badly affected in the current system, having to stump up a larger slice of take-home pay than those on higher wages.

The study found nearly three million summonses for non-payment of Council Tax were issued every year, affecting an estimated two million households. Among those struggling, low income is cited as the main reason for non-payment, the charity said.

Dr Michael Orton, author of the report, said: "Despite having a job, the struggle to pay Council Tax is part of the day-to-day difficulty of making ends meet for many people. Low income creates vulnerability to missing payments and repaying arrears."

A key part of the problem is the regressive nature of Council Tax, with a greater share of income taken from those on lower and middle earnings, according to the report. The study said Council Tax accounted for almost 5% of gross income for the bottom fifth of households and 3.7% for households in the second to bottom fifth. But for those at the other end of the pay scale - the UK's top fifth earners - Council Tax accounted for just 1.7% of income.

Dr Orton said: "Many low income households receive benefits. However, the report found that interviewees' experience of Council Tax benefit focused not on take-up, which in itself is poor, but at the low level of income at which people cease to be entitled, as well as administrative problems and the sheer complexity of the system." Greater consideration needs to be given to make the tax fairer by revising the proportion of tax levied on each valuation band, the report concluded.

Shadow local government secretary Caroline Spelman said: "The Government's abuse of the Council Tax system has turned it into the ultimate stealth tax. "A third of the basic state pension increase since 1997 is now ruthlessly snatched back in local taxes. "Labour's increased use of means tested benefits and complex application forms has resulted in a reduced take-up of Council Tax benefit, so more people on lower incomes are paying higher Council Taxes. "Hard-working families and pensioners are suffering from ever-increasing bills across the board - gas, electricity and water.

"But with Council Tax having shot up 84% under Labour, it is meeting this monthly Anna Pearson, spokeswoman for Help the Aged, said: "Around two million pensioners in this country are affected by poverty and, for many, life is a matter of getting by from week to week.

"Millions of older people face rising bills which overwhelm the meagre increases in the basic state pension. For many, this results in a life of deprivation and cutting back on essential items.

"The complex Council Tax benefit system merely serves to act as a barrier, being virtually impossible for anyone to understand. It is high time the Government realised that local taxation based on property values, instead of ability to pay, is inherently unfair."

A spokesman for the Department for Communities and Local Government said: "Government has made substantial investments in local government that allows authorities to provide high standards of service while keeping down Council Tax increases. "Funding to local government has increased by 33% in real terms since 1997. Total support from Government grant and business rates in 05/06 amounted to more than £60 billion - £3.5 billion, or 6.3%, more than in 04/05.

"Ministers have used capping powers to protect Council Taxpayers from excessive increases and will not hesitate to use them again. "It's also important to recognise that 14% of all Council Tax is met through Council Tax benefit."

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

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FIRST PUBLISHED BY: THIS IS MONEY

TAXPAYERS ARE BEING FORCED TO STUMP UP AN EXTRA £50 A YEAR TO PAY FOR COUNCIL TAX DODGERS. 

Up to 650,000 people failed to pay their Council Tax last year, and the scale of evasion by individuals and businesses cost the Treasury more than £1bn. This is the equivalent of £50 on average added on to everyone else's Council Tax bill. The disclosure brought an angry response from ministers, who accused councils of throwing money away and piling up unnecessary bills for honest taxpayers.

Council Tax is considered one of the easiest taxes to collect because it is hard to hide a home or mask its size. Yet the figures from the Communities Department showed that collection rates in England have not improved in the past three years. 

Inner London boroughs are bringing in less of the money they are owed than in 2007. Out of £22.1bn in Council Tax that should have been paid in the year to April, only £21.4bn was actually collected, leaving town halls £700m short.

This meant that just under one householder in 30 - roughly 650,000 people - got away without paying their bill. An average English Council Tax bill last year was £1,175. The highest number of Council Tax dodgers was found in London, where 4.3 per cent of householders failed to pay.

It is more difficult to collect the tax in London because of the high number of young people in the population and the large proportion who move regularly. However, there were also low collection rates of below 97 per cent in Yorkshire, the North-West and the North-East.

Communities Secretary Eric Pickles said: 'Every penny of Council Tax that isn't collected means higher Council Tax for the law-abiding citizens who do pay up on time. 'Councils with an efficient collection service are able to set lower Council Tax bills for everyone or spend more money on front-line services such as bin collections. 'The new Government will be making councils become more open and transparent about the money that is being thrown away from not collecting Council Tax. 'Once residents know how much cash is being lost due to poor administration, they will demand action from their councils to raise their game.'

Mr Pickles added: 'It is important that councils are sympathetic to the vulnerable and families who are struggling in the recession, and don't overuse bailiffs. 'But a lot more could be done to improve the back office service, especially in inner-city areas which have the worst collection rates.' Business rates, which are set by central government but collected by councils, also showed a poor return last year. The amount of business rates due was £20bn but only£19.6bn was collected, leaving a shortfall of £400m. The collection rate for local business taxes have fallen by a full percentage point, from 98.8% to 97.8%, since the recession began in 2008.

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GOVERNMENT RULES OUT COUNCIL TAX REVALUATION DURING CURRENT PARLIAMENT

FIRST PUBLISHED BY: THIS IS MONEY

THERE WILL BE NO REVALUATION OF COUNCIL TAX BANDS IN ENGLAND DURING THE CURRENT PARLIAMENT.

Communities and Local Government Secretary Eric Pickles have announce. Mr Pickles announced an independent review of Council Tax inspections, which he said would 'rein in intrusive snooping' by limiting the data gathered and stored about people's homes. 


The Communities Secretary said families in England could save up to £320 a year in local tax hikes from his decision not to go ahead with a revaluation being planned. But the opposition denounced his claims as 'cynical and misleading', pointing to a pledge in this year's election manifesto which promised:

'We will not hold a Council Tax revaluation in the next Parliament.' Council Tax bands in England are based on valuations of property carried out in 1991. Plans for a revaluation of 22m homes in 2007 were postponed by the former Labour government in 2005, amid anger over a previous exercise in Wales which led to tax hikes for many households.

Mr Pickles said the Welsh revaluation led to one-third of homes moving up one or more bands - four times as many as moved down. The less well-off were hit the hardest, with two-thirds of the hikes in homes that were originally in the lowest three bands, he said. If the experience of Wales were repeated in England, families in homes moved up one band from D to E would face a tax hike averaging around £320 a year, said Mr Pickles.

This would increase the burden of Council Tax bills which rose under Labour from £688 for a typical Band D home in 1997/98 to £1,439 in 2009/10, said the Communities Secretary. Meanwhile, the taxpayer will save up to £180m on the cost of administering a revaluation exercise, he said. An independent data audit of the Valuation Office Agency (VOA) will protect privacy and civil liberties as part of the new Government's agenda of dismantling the 'database state', said Mr Pickles. The VOA's inspectors assess properties' value for Council Tax purposes, and there was previously controversy over their collection of data on features of homes such as the number of bedrooms or bathrooms, whether it has a patio and whether it enjoys a nice view or is in a good neighbourhood.

Mr Pickles said: 

'We have cancelled Labour's plans for a Council Tax revaluation which would have hiked up taxes on people's homes.' 'The new Government will protect the privacy of law-abiding citizens from intrusive spies-in-the-sky and halt state inspectors from barging into England's bedrooms and gardens. 'We are standing up for the people who have pride in their home, and calling time on Labour's state snoopers and surveillance state. 'Hefty Council Tax bills are a constant financial worry for many people. We are setting their minds at ease, and protecting the interests of the less well-off in particular that were the hardest hit from Labour's Council Tax revaluation in Wales.'

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

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70,000 HOMES 'FACING COUNCIL TAX HIKE'

FIRST PUBLISHED BY: THIS IS MONEY

MORE THAN 70,000 HOUSEHOLDS ARE PAYING HUNDREDS OF POUNDS EXTRA IN COUNCIL TAX AFTER THE GOVERNMENT REVALUED THEIR HOMES 'BY STEALTH', IT WAS CLAIMED YESTERDAY.

Stealth rise?  More than 70,000 households are paying extra Council Tax after revaluations those who bought homes that had been improved by the previous occupants have seen their bills rise by an average of£195 a year, said the Liberal Democrats.

Council Tax 'snoopers' have placed the properties in a higher band because of changes such as new conservatories, porches, extra bedrooms and parking spaces. Inspectors from the Government's Valuation Office Agency have moved 70,010 homes into a higher band since 1997 when the opposition came to power.

Statistics published by the Department for Communities and Local Government showed that nearly 391,000 properties had been revalued in the past decade. Of these, about one in five was moved to a higher band after being studied by officials - forcing residents to pay out more. Ministers insist that a Council Tax revaluation has been put off at least until after the next general election. They fear millions would rebel if their bills increased because they were moved into higher bands.

But last night, the LibDems, who uncovered the figures, accused them of carrying out the exercise by stealth. Local government spokesman Julia Goldsworthy said: 'With almost 400,000 homes being revalued, Labour's lie of putting offCouncil Tax revaluation is clearly exposed. Tens of thousands of families are being hit in the pocket.

'It's time that the Government came clean and either admitted that this stealth revaluation is taking place or recognised that Council Tax is not fit for purpose. Until they ditch this unfair and unpopular tax, families will continue to face unaffordable Council Tax bills based not on ability to pay but simply on the value of their home.'

Under regulations introduced in 1993, the VOA logs every structural improvement that takes place to a property. If the home is then sold, the agency is notified and can decide to carry out an inspection to determine whether it should be in a new Council Tax band. According to the LibDems, the average Council Tax bill is £1,146 and the average difference between bands is 17%. It means that under revaluation the average bill would rise to £1,341 - up £195.

At present, Council Tax bills are based on assessments of properties made in 1991. A spokesman for the Department for Communities and Local Government said yesterday: 'An increase in the value of a property would not lead to an increase in a Council Tax banding until the property is sold, and maybe not even then, as the value may stay within the range of the existing band.

'As we have said on many occasions, there is no revaluation of Council Tax taking place. Any claim to the contrary is absolute nonsense, nothing more than scaremongering, and only serves to make people, particularly the elderly and vulnerable, needlessly frightened.' Last week, official figures showed that VOA inspectors have already stored digital images of 1.6m properties and are collecting details of millions more. They are logging the number of bedrooms, bathrooms and conservatories as well as noting down details of attics, porches and outbuildings.

Critics claimed it was evidence that every homeowner was facing an invasion of privacy as the Government carried out the revaluation in secret. A 'training manual' for VOA inspectors says they must carry a 20-metre tape measure or laser measuring device, camera, clipboard, survey sheets, pens and pencils, eraser - and a personal alarm.

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

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MINISTERS DENY PLANS TO RAISE COUNCIL TAX

FIRST PUBLISHED BY: THIS IS MONEY

THE GOVERNMENT HAS DENIED IT IS PLANNING TO RAISE EXTRA CASH FROM MILLIONS OF HOUSEHOLDS WITH A NATIONWIDE COUNCIL TAX REVALUATION.

Threat: Many could be pushed into paying more Council Tax. The Government has quietly renewed a multi-million pound deal with one of Britain's leading property websites to access details of sale prices and floor plans of tens of thousands of homes.

Ministers had been 'caught red-handed' preparing for a nationwide reassessment of property values if they win the next election. Current Council Tax bills are based on assessments of properties made in 1991.

A revaluation would see millions moving into higher Council Taxbands and facing bigger bills. A Council Tax revaluation in Wales saw four times as many homes moving up a band as moving down. The contract between tax inspectors and Rightmove, which boasts the largest private property database in Britain, is understood to be worth around £2.2m a year.

Since 2005, homeowners have been putting their property on the market for sale without necessarily realising that tax inspectors at the Valuation Office Agency are collating data about each home. A 34-month contract with Rightmove expired last March after a Council Tax revaluation was put on hold by ministers in September 2007. The contract was justified by the VOA because it would 'help the agency's efforts in having a cost-effective and efficient conduct of the revaluation'.

But new Parliamentary questions have revealed the deal was renewed last November and backdated to March 2008. Last month, Communities Secretary admitted that the pledge not to hold a Council Tax revaluation only applies to this Parliament, leaving the door open to one.

Tory local government spokesman Caroline Spelman said: 'ministers have been caught red-handed secretly preparing for a Council Tax revaluation in England. This contract was signed in 2005 specifically to prepare for the revaluation.

'The only reason why it has now been renewed after it expired is to help with a revaluation. The public will be alarmed that detailed information on nine out of ten house sales are secretly being passed from estate agents to tax inspectors without the public's knowledge or agreement.

A spokesman for the Communities and Local Government Department dismissed the claims as 'disgraceful scaremongering'. 'This commercial agreement for publicly available sales information is nothing to do with any supposed revaluation,' he said. 'The contract with Rightmove has been in place since 2005, and saves the taxpayer money by reducing the need for VOA staff to visit properties.'

However, the spokesman was unable to extend the pledge not to hold a revaluation beyond the next election. Under regulations introduced in 1993, the VOA logs every structural improvement that takes place to a property. If the home is then sold, the agency is notified and can decide to carry out an inspection to determine whether it should be in a new Council Tax band. A spokesman for Rightmove said: 'The agreement allows the VOA only to access data already published on the Rightmove website, though it allows the VOA to do so in a more efficient and cost effective way.'

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

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4M TO LOSE IN COUNCIL TAX REVIEW

FIRST PUBLISHED BY: THIS IS MONEY

FOUR MILLION HOUSEHOLDERS FACE COUNCIL TAX INCREASES OF £100 A YEAR OR MORE.

The estimate bears out the worst fears of homeowners in the South East that they will be punished for the rising value of their properties. Many middle-income earners in the South who live in Band D homes will pay an average of £270 more a year if their property moves up a band.

The four (4) million figures has been calculated by Sir Michael Lyons, the former town hall bureaucrat asked to find an alternative to Council Tax last year. His inquiry was shelved by the Deputy Prime Minister when ministers lost their nerve. The revaluation itself was also delayed indefinitely amid fears that it would result in large-scale tax increases. There has also been an outcry over the intrusive inspections bureaucrats have been empowered to carry out.

But an interim report from Sir Michael today urges the Government to go ahead with the revaluation in England - and tells ministers they should be honest about the fact that it will produce 'winners and losers'. His estimate means that four million householders' properties will be pushed up to a higher level in the bands used to calculate Council Tax bills.

An average Council Tax payer in England now has a bill for £1,009 a year. But those who pay bills on that scale for Band C homes in southern England would have to find an extra £112 if their property was reassessed as Band D. Many middle-income earners in the South already live in Band Dhomes. They pay more than their Band D counterparts in the North because, when the last valuation was carried out in 1991, their houses were already worth much more than similar northern properties.

Under Sir Michael's estimates, if their homes are pushed up to Band E they will face Council Tax increases of £269, up from an average £1,214 to £1,483. By contrast, many Council Tax payers in the North could see their homes drop down a band. That would benefit northerners already said by southern council chiefs to be paying disproportionately low bills.

Local government spokesman said: 'Sir Michael Lyons's interim report brings more bad news for the Government. Earlier this year, Labour panicked and postponed their revaluation for fear it would damage their chances in May's local elections. 'But this report only confirms what we already knew - when the revaluation does come, at least four million people will be hit with even higher Council Tax bills.' The warning of big hikes after revaluation undermines the Chancellor’s hopes of calming the Council Tax crisis by keeping increases next spring to around 5 per cent - still more than double the rate of inflation.

The Government has pumped an extra £1.1bn of taxpayers' money into town hall coffers to keep the bills down. A source close to the Deputy Prime Minister said there was 'nothing surprising' in the suggestion that four million householders would be paying more. 'By implication if we had four million people moving up, we would have had four million people moving down, because the intention was never for additional revenue to come to the Government,' the source said.

He said people could not continue to pay Council Tax based on 1991 property values indefinitely. Town hall money-wasters condemned HALF of all English councils are wasting money, a Whitehall spending watchdog warned yesterday. The Audit Commission said the authorities met only the minimum standards for the way they spent their share of more than £80bn a year. 

The findings come as the Government and local authorities argue over who is to blame for soaring Council Tax bills. Commission chairman James Strachan said: 'We are concerned that half of all councils are only achieving at, or below, what we consider to be minimum acceptable level.' The watchdog states: 'Internal control, how well a council manages its risks and has effective arrangements to ensure proper use of public funds, is the area where councils most consistently underperform.'Hull - home town authority of Deputy Prime Minister, who is in charge of local government - was among ten councils labelled the worst performing in England.

Some council chiefs believe the Audit Commission had been pressured by the Chancellor to make tougher judgments on local authorities. But the commission did find the Tory-run shire counties, which ministers want to abolish, were more efficient than smaller 'unitary' authorities favoured by the Government. Eric Pickles, the government spokesman, said: 'The shires are among some of the best performing councils, which makes the desire to abolish them all the more bemusing.' Christine Melsom of Council Tax protest group Is It Fair? said: 'All councils waste a certain amount of money but I think the majority of the problem stems from the Government and the shortfall in grants they give town halls.'

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HOW TO... CLAMP DOWN ON COUNCIL TAX DISCOUNT FRAUD

FIRST PUBLISHED BY: THE GUARDIAN

THE NATIONAL FRAUD AUTHORITY ESTIMATES FRAUDULENT SINGLE PERSON DISCOUNTS COST COUNCILS AND TAXPAYERS £92M A YEAR. SEFTON COUNCIL RECOVERED £300,000 BY WORKING WITH CREDIT AGENCIES

Sefton council reclaim over £300,000 a year in Council Tax by cracking down on residents claiming a single person discount despite sharing a home. Council Tax fraud is estimated to cost councils and taxpayers £130m, of which £92m is undetected single person discount fraud according to the National Fraud Authority. This figure is based on earlier work by the Audit Commission which estimated that the rate of single person fraud totals 4% of Council Tax claims.

Whatever the true figure, it is clear from our experience at Sefton that investigating discount fraud presents a significant opportunity to raise additional funds for local authorities – and can be achieved cheaply and efficiently. Along with many other councils, Sefton has tackled the problem by data matching. As recommended by the Audit Commission, we used external data from credit referencing agencies to check against our own internal data. In Sefton alone, we recovered more than £300,000 owed to us in a single exercise working with both Avarto and Experian. This was £127,000 more than we originally envisaged at the outset and amounts to 4% of all single person claims being cancelled.

Evidence also shows that councils that conduct single person discount checks for the first time stand to gain sizeable cash benefits within only a few months of commencing a programme. At Sefton we worked with the credit agencies to gather advice on compliance and how to communicate with our residents using tried and tested letter campaigns. We adopted a phased approach; the first phase of letters encouraged those no longer entitled to the discount, but whose circumstances had recently changed, to renounce their claim of their own accord. Many people only needed reminding. This also allowed our fraud investigators to treat each case differently, and move more quickly to identify and tackle hardened cases of fraud.

We provided Experian with 25,661 records of people claiming sole occupier status. They returned 3,711 records which showed strong evidence of dual or multiple occupancy. We sent out letters to people whose residency check indicated multiple residents, and those receiving letters were asked to provide details of any adult occupant residing at their address.

As a result, 2,964 customers responded to the letters providing information on changes within their household. A further 894 reminder letters were issued for non-respondents allowing seven days to respond, or lose the entitlement to the discount. During the period of review there have been some enquiries from customers having their discount removed. Although three cases have been referred back to the agencies to check their records, none of the enquiries has resulted in either a formal complaint being raised or an appeal against the cancellation of the discount.

As a result we can claim an additional £308,000 in Council Tax per year – exceeding our project target by £137,000, or 80%. We have also achieved our yearly collection targets for 2011-12, ensuring that the increased debit is converted into additional income for Sefton council and the service’s our residents rely on.

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