FRAUD COST COUNCILS £135M, REPORT FINDS

FIRST PUBLISHED BY: THE GUARDIAN

NEARLY 120,000 FRAUDS AGAINST LOCAL AUTHORITIES IN ENGLAND LAST YEAR WITH MORE THAN HALF RELATING TO HOUSING OR COUNCIL TAX

Tenancy fraud has the potential to do the most damage, the Audit Commission survey found. Councils in England lost £135m through nearly 120,000 incidents of frauds last year, a spending watchdog said today. Scams involving the 25% single occupancy Council Tax discount cost authorities £90m alone after a "sharp increase" in claims, the soon-to-be abolished Audit Commission said. 

It survey of councils also found more than 4,000 fraudulent uses of disabled blue badge parking permits. The commission – one of scores of public bodies being scrapped by the government defended its work and warned that significant council staff cuts could weaken local authority controls. Next year's "valuable" fraud survey would be the last, it said. 

Other scams reported were student council-tax discounts claimed using fake colleges and addresses, some of which turned out to be high street shops and restaurants. About 50,000 properties worth £2bn had been illegally sublet or occupied, while Birmingham city council uncovered £5.8m of benefit overpayments. The survey, called Protecting the Public Purse, revealed that false benefit claims were the most common fraud against local authorities. It reported 63,000 housing and Council Tax benefit cases, amounting to a loss of £99m. But it warned that tenancy fraud, where people live in council houses to which they are not entitled or illegally sublet them, could do the most damage.

The north-west had the highest proportion of fraud – 19.6% of the total. London was next, with 18.8%. The south-west and north-east had the lowest, with 6.5% each. The survey concluded: "With the recently announced abolition of the Audit Commission, our detected fraud survey for local government and the publication of the results will cease. "The survey provides valuable information about the performance of local government in tackling fraud. "It also helps to identify emerging fraud risks and provides an early warning system for counter-fraud staff."

The communities and local government secretary, Eric Pickles, announced in August that the commission was being disbanded, saying it had "lost its way".

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'GRANNY FLATS' TO GET TAX BREAKS UNDER NEW PROPOSALS

FIRST PUBLISHED BY: THE GUARDIAN 

ERIC PICKLES ANNOUNCES PLANS TO SCRAP COUNCIL TAX BILLS FOR LIVE-IN ANNEXES AND MAKE IT EASIER TO CONVERT GARAGES

Eric Pickles says the plans should benefit many families and pensioners. Hundreds of thousands of families could benefit from tax breaks on "granny flats" under plans being considered by the government. 

The communities secretary, Eric Pickles, said he was keen to scrap Council Tax for live-in annexes, arguing the current rules were "fundamentally unfair". It is believed ministers are also considering overhauling planning regulations and fees to make it easier for home-owners to convert garages and other outbuildings. 

Pickles told the Daily Telegraph: "We are keen to remove tax and other regulatory obstacles to families having a live-in annexe for immediate relations. "We should support homeowners who want to improve their properties and standard of living. These reforms should also play a role in increasing the housing supply."

The MP said it was unfair for households to be charged twice by paying Council Tax on their homes and annexes - which are regarded as separate dwellings. It is estimated that as many as 300,000 households in England could benefit from the change. The reforms are expected to form part of a package of policies to increase housing supply and address the shortage of affordable homes over the next two years.

Labour said it was unclear who would benefit from any further relaxation of the tax rules as annexes occupied by dependants aged over 65 are already exempt. Government sources conceded that the timing or detail of any change, which would probably require primary legislation, had not yet been considered. Such a move would also reduce the income of local councils at a time when town halls are already being forced to implement severe spending cuts.

The shadow communities secretary, Hilary Benn, said: "This is a decidedly peculiar claim by Eric Pickles as occupied granny flats have been exempt from Council Tax since 1997. "It is therefore extremely unclear exactly which pensioners the government expects to benefit from these changes, and the granny-tax fiasco doesn't give us confidence that they will get this right.

"This seems to be nothing more than an attempt to deflect attention from their housing crisis. What we need is to get building and get the economy moving again. That's why Labour is proposing to build 25,000 new affordable homes and a temporary cut to the rate of VAT. "Under the 1997 regulations, Council Tax is not paid on annexes occupied by relatives who are over 65, "mentally impaired", or "substantially and permanently disabled".

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RESIDENTS WILL RECEIVE £100,000 IN REBATES

FIRST PUBLISHED BY: NEWS & STAR

HOME-OWNERS ON A CARLISLE ESTATE WILL RECEIVE £100,000 IN TAX REBATES. WHY: BECAUSE THEIR HOUSES WERE PLACED IN THE WRONG COUNCIL TAX BANDS.

Rated at Council Tax band C, 180 homes on Kingfisher Park, off Warwick Road, have been re-banded as B after a lengthy appeal process. A spokesman for the Valuation Office Agency, which calculates bands, said: “Because we were unable to make a decision on the Council Tax level the case was taken to an independent valuation tribunal and they made the decision the band should be lower.” On the estate, 180 properties have now seen their band lowered from C to B meaning the annual bill for residents will drop from £1,148.30 to £1,004.77 – a saving of£143.53. A band B house has a value of £40,001 to £52,000, while band C homes range from £52,001 to £68,000.

A Carlisle City Council spokeswoman said it was not possible to say exactly how much the authority will have to return to each household but said the overall cost is likely to be around £100,000. The exact payments will depend on the length of time occupiers have lived in their property and whether they were claiming the single person 25-per-cent discount.

Homes on the estate also had their Council Tax waived while uninhabited in the wake of January’s flooding. Each home within the Carlisle area is allocated a Council Tax band by the local district valuer. Any property owner is able to appeal against the decision providing the appeal is made within six months of the banding decision. These appeals can take several years to resolve.  The council spokeswoman added: “When appeals are successful, we are authorised to re-calculate Council Tax liability and credit accounts or make refunds. 

“The appeal for a Kingfisher Park home was unusual because it was judged that approximately 200 similar properties would also qualify for a banding reduction. “We have now calculated each householder’s reduced Council Tax liability based on the revised Council Tax bands. “We are currently issuing refunds/credit notes to all liable householders who have lived in an affected property back to the date they were first occupied.” The first homes on the Barratt estate were built in 1998 but some were not occupied until 2002.

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HOUSEHOLDS FACE COUNCIL TAX HIKES OF 3.5%

FIRST PUBLISHED BY: THIS IS MONEY

A CYNICAL MOVE BY COUNCILS TO RAISE TAX BY 3.49 PER CENT

This means that many families will need to find £50 extra to pay their bill as the move will not trigger a local vote on proposals. Dozens of town halls are planning a ‘cynical’ rise in their Council Tax bills this year in defiance of the Government. Many of the planned rises are being pitched at levels just below a new trigger for a local referendum. Under rules brought in at the end of last year, any authority trying to push through a hike of more than 3.5 per cent must have it approved by voters. 

Most households will have to find an extra £40 to £50 on top of the average £1,200 a year bill in England. Communities Secretary Eric Pickles said: ‘We are seeing a number of councils acting as referendum dodgers who quite cynically are raising Council Tax by 3.49 per cent in a naked move to dodge the public vote. ‘These councils are treating the electorate with contempt. They should have the courage to put their hikes to the vote and justify the tax rises. Instead they are running for cover.  ‘Councillors have a moral duty to sign up to keep down the cost of living. Anything less is a kick in the teeth to hard-working, decent taxpayers.’ 

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

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

Surrey is aiming for 2.99 per cent while Cambridgeshire county council and the district councils of East Cambridgeshire and Peterborough are looking for 2.95 per cent. So far 18 councils have said they want increases up to the referendum threshold. Some 181 have so far signed up to Mr Pickles’s pledge of a Council Tax freeze. The remaining councils – half of the national total – are yet to declare. 

Councils must set their bills by the middle of next month in time to land on doormats at the beginning of April. Many are struggling following the Council Tax freeze last year and insist the £650million on offer is too little. But Emma Boon of the TaxPayers’ Alliance said: ‘It is astonishing that some local authorities have the cheek not only to hike Council Tax, but to do it just below the threshold at which they will need to hold a referendum. 

‘With the Government  offering financial help to councils to freeze the rates this  year there is no excuse for these town hall tyrants to put extra pressure on already struggling households.’ However, Sir Merrick Cockell, chairman of the Local Government Association, the umbrella body for councils, said: ‘Times are tough and councils across the country want to help families by keeping Council Tax down. ‘All local authorities froze Council Tax in this financial year and the vast majority plan to freeze it again next year. ‘The extra government support will help them do that, but this is a one-off grant that won’t be there in 2013 or beyond.’

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A ‘MANSION TAX’ WOULD HIT MIDDLE-CLASS LONDONERS

First published by This is London

AN ANNUAL LEVY ON THESE HOMEOWNERS WOULD TAKE NO ACCOUNT OF THOSE WHO ARE ASSET RICH BUT CASH POOR

All the signs are that the Liberal Democrats are pressing the Government to include some form of wealth tax in the forthcoming Budget, based on a “mansion tax” on valuable properties. Such a levy would be arbitrary, unfair and unaffordable for many of those required to pay.

An overwhelming proportion of the affected properties, estimated to be 81 per cent of the national total, would be in London, with 40 per cent of those in Kensington and Chelsea. Yet many of these properties are by no means mansions. A three-bedroom flat in South Kensington or parts of Westminster will often cost over £1 million. 

Many £2 million houses in central London are fairly ordinary town houses. These are properties that in any other part of England would sell at a fraction of the price. Such a wealth tax would target not mansions but desirable locations. Likewise, the owners who would be hit hardest are by no means the super-rich. Many are middle-class professionals or business families, with comfortable but not wealthy middle-class incomes. Many have lived in their properties for years, having purchased their home prior to the explosion in house prices. According to figures from Savills, 31 per cent of the properties in London that are worth more than £2 million have been in the same ownership for more than 10 years, 15 per cent for more than 20 years.

An annual levy on these homeowners would take no account of those who are asset rich but cash poor, either because they are elderly and no longer earning a salary or because the increase in the market value of their homes bears no relation to any increase in their income. A property-based wealth tax would also be impractical. Were it introduced, it would be likely to lead to a sharp fall in the market value of such houses in a very short time. Would homeowners remain locked into the liability to pay the tax if the market value of their homes fell below the established threshold?

If a tax on wealth is to be considered equitable, it would have to be based on a person’s total wealth, not just their home. Why should homeowners be singled out as opposed to, say, shareholders, landholders, or those in possession of commercial property, works of art and other valuables? It would be indefensible to subject some to a wealth tax while excluding those with far greater wealth merely because of the different ways in which their money was invested. It would be particularly disgraceful if the asset singled out was the primary home that a family lives in, rather than optional luxury items such as yachts or jewellery — or other assets that might produce a regular income, such as buy-to-let second homes.

As the Member of Parliament for Kensington, I have a special awareness of the effect such a policy would have, and am resolutely opposed to it being incorporated into our tax structure. It would be extraordinary if a Conservative-led Government were to do so. If we are to target the super-rich for taxation, the least we can do is ensure that carelessness doesn’t leave middle-income families caught in the crossfire. Failure to do so could force hard-working Londoners out of homes they have lived in for decades.

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COUNCIL TAX SUPPORT TO BE PROTECTED

First Published By: The Scottish Government

OVER HALF A MILLION SCOTS WILL BE PROTECTED FROM UK GOVERNMENT CUTS TO COUNCIL TAX BENEFIT.

The UK Government will abolish the existing Council Tax Benefit in April 2013 and cut the successor budget by 10 per cent. The Scottish Government and COSLA have now agreed to cover the £40 million cost of the cuts in 2013-14 - the Scottish Government will provide £23 million and COSLA will provide £17 million.

558,000 people in Scotland on the lowest incomes currently receive Council Tax benefit, including the unemployed, pensioners, those who cannot work because of disability, carers and people who receive tax credits. We will not allow them to be victims of UK cuts - we will work to protect them.

Working closely together, the Scottish Government and councils will now cover the £40 million cost of the Council Tax benefit cut in 2013-14 to protect vulnerable individuals, a unique approach across Great Britain.  In the coming months we will establish a national schedule of reductions to Council Tax, so that anyone currently receiving Council Tax benefit will not have to pay more Council Tax in the next financial year.

The Scottish Government is looking after household budgets, with a Council Tax freeze, free prescriptions, concessionary travel, and our abolition of road tolls and tuition fees. It is right that we take action to protect the thousands of pensioners and families who would have been affected. Only through this decisive action by the Scottish Government and COSLA can vulnerable people in Scottish society be protected.

We have challenged the UK Government on their cuts to Scotland and their attack on the least well off. We will put in place measures that reflect the compassion and fairness of Scotland in line with our Council Tax freeze.

COSLA President Councillor Pat Watters said: “Scottish local government has a long and proud history of standing up for and protecting the most vulnerable in society. “In taking this decisive action to cover the cost of Council Tax benefit, together with the Scottish Government, we will once again be protecting the most vulnerable in society.

Can I be clear that we are talking here about the real victims of this particular cut and that is why Scottish local government firmly believes it is the right and proper thing to do and why we are willing to put in our share of the £40 million needed to protect them from the reality of such a harsh cut.”

David Manion, Chief Executive of Age Scotland, said:

“It is reassuring to see the Scottish Government and COSLA working together to ameliorate some of the pain that older, vulnerable people will feel and Age Scotland welcomes the decision to allocate £40 million to help them with their Council Tax bills.

Council Tax benefit is a hugely important benefit for older people on low incomes and we are delighted that following the move to devolve responsibility for this entitlement to Scotland, the Scottish Government and COSLA are ensuring that it is retained. “Westminster’s 10 per cent reduction in funds would lead to a significant drop in support and additional financial pressures for some people who are already struggling on low incomes and we are confident that older people below pension age who are on low wages, or are unemployed and have long-term health problems will greatly benefit from this additional support.”

558,000 people receive Council Tax Benefit (CTB) in Scotland, which is worth £387 million to Scotland. Eligibility is based on a number of factors, including income, savings, receipt of other benefits and financial status of partners. 

Certain people are automatically considered for Council Tax benefit if they receive other benefits though a system of ‘passported benefits’, such as income support, Pension credits or Job Seeker’s Allowance. CTB is administered by local authorities on behalf of the Department of Work & Pensions (DWP), who meet the costs of benefits and the administration of the system. 

Council Tax Benefit is paid to Local Authorities, not to individuals. Individuals in receipt of CTB receive a Council Tax bill net of the benefit paid by DWP. Councils handle applications, calculations and any initial appeals against awards and provide the public face of support to applicants.

The UK Government’s Welfare Reform Act will abolish CTB from April 2013 and the UK Government will then ‘localise’ support for Council Tax to individual Councils in England.  Reduced funding - current CTB levels minus 10 per cent - will pass to the Scottish Government which will be responsible for assisting individuals to meet their Council Tax liabilities from April 2013.

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COUNCIL TAX FREEZE SPLITS TORIES

First Published by: BBC

COUNCIL TAX FREEZE SPLITS TORIES

The government's drive for a Council Tax freeze has brought tensions with council leaders to the surface.

Tory council leaders have long been privately voicing their exasperation and that's putting it politely - with Local Government Secretary Eric Pickles and his handy hints and tips as to how they should be doing their jobs.

This centres on what they would see as his overly optimistic view of their ability to maintain essential public services in the face of dwindling finances.

The government's drive for a country-wide Council Tax freeze next year has brought these tensions to the surface. Mr Pickles is offering councils a one-off payment - equivalent to a 2.5% rise in their Council Tax - if they agree to a freeze for the coming financial year.

Ministers, of course, have no power to enforce a freeze. Indeed there are few things they like talking about more than all the decision-making powers they are returning to local communities.

Balancing act. 

At the same time Mr Pickles - and his lieutenant Local Government Minister Bob Neill - are making it quite clear that in their opinion councils have a "moral duty" to take the money and freeze the Council Tax. Not to do so, they say, would be a "kick in the teeth for Council Taxpayers" and to "treat the local electorate with contempt".

So it's not a great time to be leading a Conservative council which takes the view that it can't balance the books without putting up Council Tax. South Hams District Council leader John Tucker is one of many council chiefs facing new challenges

Most Tory councils are toeing the line. But authorities like Surrey County Council and South Hams District Council in Devon are kicking back. Surrey is implementing a 2.99% increase. So councillors there clearly don't feel the government's 2.5 will even cover this year - let alone the longer term.

South Hams is putting Council Tax up by just 2.5%. On the face of it, this is more puzzling: wouldn't it be cleverer to accept the government's generous offer, give your electors a little Council Tax holiday and then put up Council Tax the following year if you really felt you had to?

It's not that simple, though, for councils like South Hams or Surrey.

They clearly see Council Tax as something which - like hot air - has an inexorable tendency to rise.

Accordingly, their financial planning is obviously based on at least a vague presumption of cumulative increases in the years to come. South Hams' 2.5% increase will roll over automatically into the council's base funding in the following year and the years after that.

Taking Uncle Eric's short term shilling would have thrown things into disarray because the money simply wouldn't be there to roll over into the next year.

A council could, in theory, simply whack up the Council Tax the following year to fill the hole. This, though, would present a major headache in practice. Maintaining the funding level provided by the expired government grant would mean a 2.5% Council Tax rise just for starters.

Throw in the additional rise calculated for that year itself (let's say another 2.5% or so for the sake of argument) and the council would be in real trouble.

Demanding an increase of 5% or more from taxpayers at one fell swoop would have run the risk of capping under Labour. Now, councils face an even more formidable obstacle: any increase above 3.5% would have to be subject to a local referendum. And the government has made it clear that threshold could change in future.

Eric Pickles reportedly told the Local Government Association's finance conference that refusing the Council Tax freeze money because it would not be part of the base funding in future years was a "ludicrous argument". Not because the proposition is untrue, but because the "whole idea" of the freeze is to get councils' financial bases down.

That would seem to leave those Tory councils with their hearts set on year on year tax increases in direct ideological conflict with their colleagues at Westminster. That's one of the points I put to South Hams District Council leader John Tucker this week in the film below.

We also touched on a general feature of the government's much-trumpeted localisms agenda.

On the one hand, ministers going out of their way to bang on about local authorities having the freedom to make the judgements they see fit.

But, on the other, making it emphatically clear what they think those decisions should be and publicly excoriating those councils who dare to use their freedom to disagree. 

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