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 under-perform.'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 judgements 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.'

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

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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.

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

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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 for Council 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.

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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 of Council 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 £755.60 in 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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