LOCAL AUTHORITIES PLANNING BIG COUNCIL TAX RISES TOLD TO HOLD REFERENDUMS

PUBLISHED BY THE GUARDIAN

THE COMMUNITIES SECRETARY, ERIC PICKLES, HAS ANNOUNCED THAT ANY LOCAL AUTHORITY PLANNING TO INCREASE COUNCIL TAX BY 3.5% OR MORE WILL BE REQUIRED TO HOLD A REFERENDUM ASKING LOCAL PEOPLE TO ENDORSE THE MOVE.

Pickles described the move as a radical extension of direct democracy, but it is also likely to deter many councils from risking the judgment of their council-tax-payers.

The government says it has set aside £675m for a second year of Council Tax freezes. The Department for Communities and Local Government said if councils agree to the freeze, local taxpayers living in an average band D home in England could save up to £72 a year in Council Tax.

The power to trigger referendums was contained in the Localism Act and in some ways replaces the power to impose caps. Parliament will be asked to endorse the final vote threshold before councils set their annual budgets in the spring. Pickles said: “Since 1997 people have seen their Council Tax more than double, pushing typical bills to £120 a month.

“We are getting to grips with this with another Council Tax freeze deal and by radically extending direct democracy over big bill increases with a new local tax-lock. “Councils have a moral obligation to help hard-working families and pensioners with the cost of living. “If they want to hike taxes on their local residents above 3.5% they’ll now need to get a direct democratic mandate to do it.”

The government also set out its provisional second-year funding settlement for English local authorities as announced a year ago. Councils will have an average spending power of £2,186 per household at their disposal. £27.8bn will be distributed in 2012-13 in a fair and sustainable way across all parts of the country, the department said.

For example, the average spending power per household in Hackney will be £3,050, compared with £1,537 in Windsor and Maidenhead, reflecting the fairness of the settlement, it said. Overall, the average spending power reduction for councils in 2012-13 is expected to be limited to just 3.3%, or £75 per household, less than last year’s comparable figure of 4.5%.

“The second year of our fair and sustainable settlement will mean councils still have on average £2,186 for every household they serve, enough to safeguard the most vulnerable, protect taxpayers’ interests and the frontline services they rely on,” Pickles said.

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TWIN COUNCILS TAKE DIFFERENT VIEWS

FIRST PUBLISHED BY: BBC

TWIN SUFFOLK DISTRICT COUNCILS BABERGH AND MID SUFFOLK TOOK COUNCIL TAX DECISIONS YESTERDAY WHICH SET THEM ON DIFFERENT TRACKS.

Babergh decided to increase its Council Tax by 3.5% while Mid Suffolk chose to freeze its demands after a lively debate. Babergh has no overall political control and Mid Suffolk has a Conservative majority. Last year a referendum on a full merger of the councils was lost (a majority of Babergh voters were against). But the integration (we have had joint refuse collections for some time) of services and administration goes ahead.

So both councils had similar advice on which to base their decisions. After a strong debate, Mid Suffolk decided to take community secretary Eric Pickles’s shilling. The government has offered a one off grant, equivalent to a 2.5 per cent tax rise, this year to councils that freeze their demands. That means that a 3.5 increase results in a 1 per cent rise in spending power. And any rise of more than 3.5 percent would trigger a costly referendum.

A report from the joint management board to the Executive Committee of Mid Suffolk in January suggested that accepting the Government’s offer could result could higher rises in the future. Like all local government finance it is a complicated issue, but that report puts the issues as clearly as as I have seen anywhere. Here is the relevant section (full report):

Earlier in the year, the Government announced its intention to offer local authorities a grant to enable Council Tax to be frozen again in 2012/13. The grant will again be equivalent to a 2.5% increase in Council Tax but will only be a one-off (whereas the 2011/12 grant is for 4 years).

Unlike 2011/12, not all councils are likely to take the grant due to the ‘knock on’ financial implications in future years of only receiving a one-off grant. Although the main options appear to be to either take the grant or increase Council Tax by 2.5% (or slightly more), it is important to understand the impacts in future years of different percentage increases in 2012/13. 

A further announcement has been made that any Council Tax increase of more than 3.5% will be subject to a local referendum. A 2.5% increase equates to £3.78 a year for a Band D property (3.5% = £5.29). If the one-off Government funding is accepted, that will have the same overall impact on the 2012/13 budget as a 2.5% Council Tax increase.

The reasons for having a Council Tax increase in 2012/13 and not accepting the Government’s grant of £136,000 are as follows: As the Government grant is a one-off, that amount would then have to be added to the savings that are required in 2013/14. A 2.5% increase in Council Tax just to stand still in 2013/14 would then be needed A 5% CouncilTax increase would be needed in 2013/14 or subsequent years to ‘catch up’, but this would be subject to a local referendum, which would be costly.

Not increasing the Council Tax by 2.5% in 2012/13 would mean that there is a lower tax base for future years and the £136,000 is lost each and every year in the future – unless that can be recouped through higher than normal increases in subsequent years, either as indicated above or by gradual year-on-year phased increases e.g. of around 0.8% a year over 3 years.

Suffolk County Council and Suffolk Coastal District Council have also decided to freeze their taxes. But every Council Tax payer in the county faces increases because the police authority precept is increasing by 3.75 per cent and many town and parish councils are pushing up their shares (average rises of nearly 4 per cent in Mid Suffolk).

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

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SLASHING BENEFITS IS A BREEZE WHEN YOU DISREGARD THE DETAIL

First Published By: The Guardian   

WARNINGS OVER THE UNFAIRNESS OF CUTS TO CHILD BENEFIT AND OTHER PAYMENTS ARE SIMPLY BEING IGNORED BY THE GOVERNMENT

The government is wobbling over its child benefit cut, but problems with the detail were exposed from the off. David Cameron recently went on the record to acknowledge that his plans to snatch child benefit from higher-earners could create rough justice around the edges – edges he is keen to get smoothed. 

The first thought this stirs is the stark contrast between the prime minister's concern with top-rate taxpayers and the abject disregard for the millions of poorer households who will be hit by wider social security cuts.  

Last week the reversal of seven separate Lords government defeats over welfare were rammed through the Commons: closely-argued points that peers had made about protecting vulnerable people were simply swept away. But the coalition's prioritising of the comfortably-off is now well familiar. The second thought about the child benefit wobble, exposed last week by the Institute for Fiscal Studies, is more instructive. Namely, the breezy lack of concern with getting the detail right. As Robert Joyce – the institute's research economist – put it, the precise problems that are suddenly nagging at Cameron were apparent from the off.

The first – in Cameron's phrase – is "a cliff edge". A modest pay rise that just pushes a parent into the top bracket will leave them worse off, as they suddenly lose a payment worth £1,750 a year for a parent of two, or more for bigger families. Cameron's second concern is being unfair to families with one breadwinner. A parent on £45,000 with a stay-at-home partner loses everything, whereas a couple on £40,000 a piece – or £80,000 in combination – will keep the benefit.

The good news is that these snags are, in principle, soluble. The cliff edge could be smoothed by withdrawing benefit gradually as income rises. And there could be a switch from individual to joint family income assessment by merging child benefit into the tax credits. The bad news is that the policy becomes effective next year – and to get such modifications right, there needs to be time to think them through. The latter option, for instance, would represent a U-turn for a coalition that has been hacking away at tax credits; it would confuse broader welfare reforms if it were not melded properly with these.

Having worked in Whitehall, I feel sure officials would have spotted these problems and warned ministers before the policy was set. But even if the civil service failed on this occasion, the IFS flagged up both issues on the very day the policy was announced – and yet ministers initially paid no attention. These ignored problems, remember, affect families on decent wages, most of whom will vote. It seems a safe bet that problems with myriad other reforms affecting the marginalised will not be on the ministerial radar. Half-baked replacements for the social fund and for Council Tax benefit are only two examples of disasters waiting to happen.

The bigger fear, perhaps, concerns the software systems that are meant to start paying the universal credit from next year: glitches could sink the policy. Whispers about this abound in Whitehall but, so far, are only rumours. Certainly, the failure to think through a child benefit cut for the middle classes inspires no confidence about how policy will be implemented when it comes to the poor.

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

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COUNCILS PICK WIDOWS' POCKETS

FIRST PUBLISHED BY: EXPRESS UK

WIDOWS AND DIVORCEES ARE BEING TARGETED FOR A HUGE RISE IN THEIR COUNCIL TAX BILLS.

Labour-run councils want the eight million people living alone to pay the same rate as couples or households with several working adults.

Their plan to scrap the 25 per cent single person discount would push up bills by nearly £360 a year on the average Band D home. Communities Secretary Eric Pickles last night condemned the move.

He said the unfair “widows tax” would affect millions of pensioners living alone after the death of their spouse. Single parents would also be hit.

“There is clearly a well-orchestrated campaign being run by the Labour Party to target the elderly, single mothers and the most vulnerable,” Mr Pickles said. “They want to punish people who have worked hard all their lives and paid their taxes simply because they live on their own. 

There is a gross sense of injustice at raising taxes that could force people out of their homes. This is a widows tax and shows how out of touch Labour is.”

The demand by Labour-run town halls to scrap the discount, which has been in place since Council Tax was introduced in 1993, emerged from a Government consultation on how to save 10 per cent of the cost of Council Tax benefit. In scores of submissions from Labour councils, town hall chiefs argued that working single people or pensioners not on benefits could afford to pay the full council tax bill to cushion a £500million cutback on benefit claimants.

The London borough of Southwark said: “The unconditional award of a single person discount regardless of income seems inappropriate when asking local authorities to manage a 10 per cent reduction in funding while protecting vulnerable claimants.”

Oldham’s treasurer Steven Mair said the “universal discount irrespective of income” should go, while Bradford’s strategy delivery manager Mark Widdowson said its exclusion from debate was a “major missed opportunity”.

Among those backing the call were Luton, Doncaster, Bedford, Colchester, Burnley, South Tyneside, Exeter, Sheffield and Oxford councils as well as the London boroughs of Islington, Hounslow, Brent, Harrow and Newham. Matthew Elliott, chief executive of the TaxPayers’ Alliance, said: “It beggars belief that some town halls are suggesting abolishing one of the few reliefs on Council Tax at a time when so many are struggling with that incredibly burdensome bill.

“Getting rid of single occupancy discount would be a tax rise for millions of people in order to sustain generous council tax benefits for a select few. Council Tax has almost doubled in the last decade. Some local authorities need to stop treating taxpayers as an endless source of revenue and focus on finding savings instead.”

Of the 23 million households in England, eight million claim the discount. Of that total an estimated 560,000 are working single parents. A further 2.9 million homes are occupied by a single person over 65. The average Band D bill is £1,439.

In its submission, South Tyneside council said it would be “easier to collect an increase in Council Tax as a result of a discount being withdrawn from someone who can afford it than someone on benefit who can’t”.

Kirklees council in Yorkshire said: “Not all those in receipt of single person discount can be said to need the 25 per cent reduction in liability.”Stockton-on-Tees council calculated “removal of the automatic entitlement of 25 per cent single person discount would generate 2.5 times the 10 per cent savings target”.

The Chartered Institute of Public Finance and Accountancy said: “Given the costs of the single person discount scheme it has to be asked whether this continues to be a fair way to use limited resources when others on much lower levels of income are facing reductions in help and therefore increase in the amounts they will have to pay in respect of Council Tax.”

The political row over council tax discounts emerged as Work and Pensions Secretary Iain Duncan Smith vowed to overturn defeats inflicted on the Welfare Reform Bill in the House of Lords. Bishops led the revolt against plans for a £26,000 benefit cap and watered down proposals on child maintenance and Employment Support Allowance. The Bill returns to the Commons on Wednesday.

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ARE COUNCIL TAX DEMANDS TOO HEAVY-HANDED?

FIRST PUBLISHED BY: CONFUSED.COM

COUNCIL TAX IS THE ONLY HOUSEHOLD BILL THAT CAN LAND YOU IN PRISON FOR NON-PAYMENT. YET DESPITE THIS THREAT, PLENTY OF US STILL PAY IT LATE.

Some 36 per cent of householders who admitted to tardy bill behaviour said council tax was the one they most often fell behind with, according to a survey of the nation’s spending habits by discount website MyVoucherCodes.

This is followed by mobile phone (31 per cent), gas and electricity (29 per cent), rent/mortgage (17 per cent) and TV/phone/broadband (13 per cent).

Lack of funds

In what seems to be a sign of the times, the poll of 1,357 people found that the majority of those paying bills late simply did not have the money.

Mark Pearson, 
chairman of MyVoucherCodes, said: “I was quite surprised that council tax was the bill most commonly paid late by Brits, because that’s really the one that can get you in the most bother.

Law and order:

Not sure how serious the council are with threats of imprisonment over missed bill payments? Well, here’s my story, where I was recently at the receiving end of a Council Tax demand.

I missed a payment through simple forgetfulness (I’d recently moved, set up direct debits for all my bills but somehow forgot to do so for Council Tax), and around one month later I received a letter not just demanding payment, but also threatening to withdraw my right to pay in instalments if I failed to clear the arrears within seven days.

Ignore this letter at your peril: after this, there are no more reminders, just a court summons. Yes, you’ll be asked to appear before your local magistrates court to answer for your crime.

Court summons:

This seems a heavy-handed approach to dealing with a debt that for many people has accrued because they can’t afford the bill. 

I faced this situation myself as a student. I failed to keep up with the monthly payments and the council in question reacted by withdrawing my right to pay by instalments, swiftly followed by a court summons when I failed to pay the full year’s bill in one go.

Trying to come to an arrangement with the council at this point proved impossible as it refused to reinstate my monthly instalments.

Desperate to avoid court, I was sufficiently scared into admitting my money problems to a sympathetic friend who lent me the cash to clear my debt.

Good practice:

I was lucky that I had a friend to help out. But Iooking back, I feel the council could have been more helpful. It was this sort of heavy-handed approach that led debt charity Citizen’s Advice to issue councils with a good practice guide in 2009, to ensure better Council Tax arrears collection practices.

But even now, the very first letters householders receive if they miss a Council Tax payment is a demand for the bill to be paid within seven days or have the right to pay in instalments withdrawn. Surely this can’t be the right approach? Especially as council tax debt isn’t a problem that’s going away.

Last year Citizens Advice Bureaux in England and Wales dealt with almost 170,000 problems involving Council Tax debt, an increase of 6 per cent on the year before.

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

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THE GOVERNMENT MUST SORT OUT COUNCIL TAX

FIRST PUBLISHED BY: THE GUARDIAN 

GEORGE OSBORNE'S CONFERENCE PROMISE TO FREEZE COUNCIL TAX FOR TWO YEARS WAS CLEVER AND EYE-CATCHING PRE-ELECTION POLITICS: THIS MOST VISIBLE OF TAXES IS THE BILL THAT MANY ELECTORS MOST RESENT.

Council tax is not an invention of this Labour administration, yet Labour will increasingly be blamed for its continued flaws unless it grasps the nettle and offers a better solution than the new Tory plan. 

The Osborne proposal is designed to win votes - but its flaw is that it does nothing to address the underlying problems of local council finance which must be addressed soon.

Having been wrong footed by the shadow chancellor last year over inheritance tax, Labour should this time ensure that its response is effective both as short-term politics, and as a sustainable policy strategy.

There is a superficial attractiveness to Osborne's suggested "deal" between a Conservative Treasury and those councils who are willing to participate; if efficiency savings are made locally to a certain threshold then the government will "match" these and enable a £200 lower Council Tax bill than might otherwise have been the case.

Everyone is in favour of efficiency savings – though we have heard this many times before. Vague plans to slash "advertising and consultancy budgets" are too unspecific. The risk for the Conservatives is the appearance of promising a tax cut, when in truth it will only happen in a hypothetical scenario if several hurdles are overcome.

Here, then, is a political liability that Labour could exploit - if the Tory plan turns out to have been a political gimmick, it may look calculating and stealthy to an unforgiving public mood.

Moreover, Osborne cannot guarantee the levels of council tax he seeks unless he also guarantees to keep the local government grant settlement at a high level. Otherwise, any Council Tax freeze may only occur at the expense of vital public services.

Placing a sticking plaster over the Council Tax problem just will not do. There are deeper inequities in local government finance that need to be solved. Yet the shadow of the poll tax means that governments are always tempted to leave it in the "too difficult to think about" category.

However proper council tax reform is possible to achieve - and in a politically popular way. A shift away from grant dependency and towards a broader basis for local revenues is the underlying reform most needed in order to modernise council finance.

Council Tax is based on ridiculously outdated 1991 property values. There should be an automatic biannual rolling revaluation independent of government which would help ensure that some residents do not overpay beyond the point justified by the true capital value of their property.

Council tax should also be made fairer as it applies across society: the narrow range of bands is still too regressive and a "fairness" reform would do more for those in less expensive properties.

Yet even the ditching of the hated poll tax for Council Tax in the 1990s showed that trying to shift to an objectively fairer system on a revenue neutral basis could still leave losers as well as winners.

What stalls a rational and fair reform is the fear that losers will feel the pain – with political consequences – while winners barely notice the gains that they quietly pocket.

But there is a way out of this conundrum.

Labour's reforms should therefore ensure there are no losers at all – and that everyone gains from the changes. How is this possible? New money needs to be identified for "transitional relief".

We would suggest that £3.5bn could be raised by asking those super-wealthy individuals lucky enough to be earning over £250,000 incomes to pay 10% more on every pound earned above the quarter-million level.

This would allow a very real £200 reduction in Council Tax bills for the average householder as a "reform discount". Any efficiency "bonuses" could drive this reduction even further.

This could trump the flimsier efforts offered at the Tory conference. Immediate pressures on household budgets would be alleviated – and without threatening local services. The key difference would be in also seizing the opportunity to manage the transition to a fair and sustainable council tax reform.

Labour needs to sort this problem out soon. If the government misses this opportunity, it risks facing a Conservative offer which, on the surface, may look very appealing to the electorate – even if its proposal leaves the headache of true reform to another generation.

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

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COUNCIL TAX 'REBELS'

FIRST PUBLISHED BY: LOCAL GOVERNMENT CHRONICLE

KEEP TRACK OF WHICH COUNCILS HAVE REJECTED THE GOVERNMENT’S FINANCIAL INCENTIVE TO FREEZE COUNCIL TAX NEXT YEAR

Brighton & Hove City Council, the country’s first council to be run by the Green party, were the first to announce they would reject the governments’ funding for a Council Tax freeze and instead ask residents for 3.5% more next year.

Ever since the chancellor announced last Autumn that there would be funding for a second Council Tax freeze there have been mutterings about the financial pitfalls of the deal.

Instead of the four years of funding offered in 2011, and which was snapped up by every council in the land, this year’s offer is for one year only, leaving councils quickly facing a financial cliff edge which will have to be smoothed by spending cuts/savings or an even larger Council Tax increase in 2013-14.

Sensing this disquiet, LGC surveyed councils and found that as many as one in five were seriously considering turning down the financial incentive. Soon after our survey, it emerged that Teeside leaders had been discussing the issue and in a united front, bar Hartlepool BC, four of them announced they would increase Council Tax by 3.5%

Nottingham and Leicester City Councils weren’t far behind, and since then we’ve also heard from Gedling BC and Stoke-on-Trent City Council.  So far, all likely suspects as councils run by national opposition parties, but would any Conservative and Liberal Democrat councils take a stand and turn down their government’s not very enticing one-year offer?

Interestingly all the Tory councils declared so far have kept their increase below 3% while the Labour and Green councils have opted for as large an increase as they can get without triggering a referendum.

More councils - of all colours - are expected to announce increases in the weeks before budgets must be set, so it will be interesting to see whether any Tory council breaches the 3% mark. 

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

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