TAXPAYERS FOOT £1BILLION BILL TO PAY FOR PENSIONS OF COUNCIL STAFF RETIRING EARLY

FIRST PUBLISHED BY: THIS IS MONEY

EARLY RETIREMENT FOR TOWN HALL WORKERS HAS COST TAXPAYERS £1BILLION OVER THE PAST THREE YEARS, IT WAS REVEALED YESTERDAY.

Councils topped up the pensions of about 40,000 staff leaving before their official retirement dates. The costs mean that each council worker in England and Wales allowed early retirement on grounds of redundancy or ill health has cost an extra £25,000 on average. Pressure: David Cameron, already under pressure for the tax decisions, will face more anger from taxpayers on council worker's early retirement pay

The early retirement bill – which costs the equivalent of £50 for a typical Council Tax payer has been condemned by Council Tax protest organisations and taxpayer pressure groups. The scale of the spending came to light after the TaxPayers’ Alliance claimed there was a £54billion black hole in council pension funds which could have to be met by a rise in Council Tax, as reported by the Mail yesterday.

Since 2,000 local authorities have been required to make special ‘pension strain’ payments whenever a staff member leaves early on grounds of redundancy or ill health. The payments were introduced following a highly critical report by the Audit Commission watchdog, which complained about the high level of council early retirements and said ill health retirements were often unnecessary. 

Pension strain payments are designed to compensate the 

Local Government Pension Scheme for the extra cost of paying a full pension to a worker who has not completed his or her programme of contributions. Inquiries by the Daily Mail under the Freedom of Information Act revealed some local authorities are paying millions a year to top up pension funds.

In the financial year ending March 2011, Bolton paid out £4.45million; Cheshire East £2.7million; Gateshead £3.5million; Hertfordshire £6.3million; Islington £2.85million;Tower Hamlets £3.4million; Stoke-on-Trent £3.1million and Wiltshire £2.4million.

The pension strain payments total was just over £450million among the 209 local authoritiesin England and Wales who provided figures for the three financial years up to last March. But 167 local authorities – including a number of large county, metropolitan and unitary councils likely to have paid high bills – failed to give figures. And, even if their payments were no larger than those who did give figures, it would mean the bill to taxpayers in England and Wales has been at least £800million over the past three years.

Scottish councils which gave figures have paid £108million over the past three years, bringing the likely full total, including payments by councils which did not reply, to £1billion. Bills: Taxpayers will be unhappy to know that town hall workers taking early retirement hikes up their bills.

This means a typical case of early retirement from a council job through redundancy or ill health for someone aged 55 or over costs the taxpayer a full pension, a lump sum likely to be similar to the employee’s annual salary plus £25,000 in strain payments paid in compensation to the LGPS.

The scale of payments triggered demands for full disclosure of the cost of early retirements.

Christine Melsom, of the Is It Fair? Council Tax protest organisation, said: ‘What may have seemed fair years ago, when salaries compared with the private sector were low, is now just an unacceptable perk for local government employees. ‘Things have got to change – not next year or the year after but now. We as taxpayers can no longer afford to maintain these levels of payments.

‘Councils have paid and will be paying out thousands of pounds to employees, some of whom will never have to work again. But how many of those receiving extortionate payouts are being re-employed as consultants or moving directly into another post elsewhere?’

Council workers joined a public sector workers’ strike in November aimed at maintaining final salary pensions and keeping contributions low. Early retirement spending has let some workers leave with full pensions aged 55.

The Local Government Association, the umbrella body for councils, said costs were rising because local authorities were having to shed staff. LGA Workforce Board Chairman Sir Steve Bullock said: ‘These payments are made to cover the pensions of those forced into retirement by ill health or redundancy. 

As good employers it is right that we support those pension fund members who have been incapacitated by illness.  ‘The costs associated with redundancy are indicative of the fact that local government has dramatically downsized to save money. Since 2008 the local government head count has been reduced by nearly 10 per cent.

‘This has caused a short-term spike in pension costs but the payments are one-off with no ongoing liability.’

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HOME-OWNERS STAND TO CASH IN ON FLAWED BANDING

FIRST PUBLISHED BY: THE GUARDIAN

AN APPEAL AGAINST A WAYWARD 1991 VALUATION COULD SAVE THOUSANDS

Thousands of home-owners could save thousands yes thousands of pounds by having their homes re-banded into a lower Council Tax band. Martin Lewis - the self-styled money saving expert - says plenty of householders are paying too much in Council Tax because their house is in the wrong band. But they can appeal against this by contacting Rebates UK Claims & Services Ltd located in Manchester.

The amount of Council Tax paid in England and Scotland is based on a banding system last updated in 1991. Each home is in one of eight bands, A to H (with H being the most expensive), depending on the value of the home at the time. Homes in Wales are in one of nine bands last set in 2005.

Lewis says that the way the valuations were carried out in 1991 means that thousands of homes are in the wrong band. Generally, valuers simply drove round neighbourhoods, made a rough estimate of the type and value and homes, and banded all homes accordingly. 

Many householders will be overpaying Council Tax, although an equal number may be underpaying but this is not a problem.

"Many people are living in incorrectly banded houses, and with the internet it's now possible for free to check and challenge your band, possibly winning a backdated payment from 1993, when the system started, worth thousands," he says. But its always best to use companies that specialise in property re-banding because it can be difficult dealing with the VOA. 

Anyone wanting to check which band their home is in should visit the Valuation Office Agency's website, www.voa.gov.uk (England and Wales) or the Scottish Assessors Association site, www.saa.gov.uk, for Scotland. You then have to compare it with similar houses in the neighbourhood. "It's very easy to do, and the results can be startling," says Lewis. "If there looks to be a discrepancy, ie you're in a higher band than neighbours in a similar property, you may have a case."

Those in areas of mixed housing are most likely to have been assessed wrongly. Those on estates where all properties were built at the same time are less likely to find a discrepancy. Lewis suggests that those who have moved into a property in the last six months have the strongest claim to have the house re-banded, but there is nothing to stop longer-term residents from applying for a change.

He says it can be as simple as a phone call to the local authority. If it refuses your request, you have the right appeal to the VOA or SAA. It will help if you can show evidence of your house's value in 1991. Compare it with the prices below.

Clearly, there is little point in disputing your Council Tax band if there is any chance that you will be moved up a band.

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NO TAKERS FOR COUNCIL TAX BENEFITS

FIRST PUBLISHED BY: THIS IS MONEY

HEFTIER COUNCIL TAX BILLS WILL BE GOING OUT IN THE NEXT FEW WEEKS - WITH THE AMOUNT RISING BY UP TO FIVE TIMES THE RATE OF INFLATION.

But many struggling households, particularly pensioners, are missing out on Council Tax benefit (CTB) which could cover all or some of their bills. CTB is one of the most under-claimed benefits. Fewer than half the home owners who are eligible claim it, according to Age Concern.

'Up to £770 million in Council Tax benefit for older people is lying unclaimed every year and up to 1.7m pensioner households are missing out. By making a claim the average pensioner's Council Tax bill would be cut by around £425 a year,' says Age Concern's director-general, Gordon Lishman.

This week sees the Work and Pensions minister, launch a campaign to encourage pensioners to claim the benefit. It comes within days of 83-year old Council Tax rebel Elizabeth Winkfield hitting the headlines because she is willing to go to prison rather than pay an extra £93.91 in Council Tax.

And anti-Council Tax campaigners say the minister's approach is misguided and patronising - because as a means- tested benefit it is complex and penalises those with savings.

How much Council Tax benefit you can claim depends on your income and savings. If you receive the guarantee part of the Pension Credit, you will usually get the maximum benefit - the whole of your bill paid for you. But this could be reduced if you have an adult son or daughter living with you as they could be expected to pay something towards it.

If you have savings of more than £16,000, you are not eligible - unless you are already receiving the guarantee part of the Pension Credit. Benefits are reduced for those with savings between £6,000 and £16,000.

For those age 60 or over, any benefit will fall by £1 a week for every £500 of savings - or part of £500 - over £6,000. So if you have £7,300 savings, you will be deemed to have extra income of £3 a week (£7,300 minus £6,000 equals £1,300, which is three units of £500 or part of £500).

Savings include cash, money in bank or building society accounts, National Savings Certificates and accounts, Premium Bonds and shares. It does not include the value of your home. If you are under 60, you lose £1 for every £250 of savings.

Next you need to compare your income - including your pension but not income from savings - with the sum the Government deems necessary to cover basic living costs. This 'applicable amount' is usually £116.90 a week for a single person or £175 for a couple over 65. If you are receiving the guarantee part of Pension Credit or your income is the same or less than the applicable amount, you will normally receive benefit to cover all the bill.

But if your income is more it will be scaled back. For every £1 of extra income you will lose 20p in benefit. If your income is £10 higher than the applicable amount, you will lose £2 from the maximum benefit. So if your Council Tax bill is £15 a week, your benefit will be scaled down to £13.

Age Concern's Fact-sheet 21, The Council Tax and Older People, is available free from 0800 00 99 66 or go to www.ageconcern.co.uk. Your local Citizens' Advice Bureau (number in your local phone book) can help you make a claim.

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THE GREAT COUNCIL TAX U-TURN

FIRST PUBLISHED BY: THIS IS MONEY

MILLIONS OF FAMILIES ARE TO BE SPARED SWINGEING COUNCIL TAX RISES AFTER A CLIMB DOWN BY THE GOVERNMENT.

According to Whitehall sources, the Deputy Prime Minister has suspended a nationwide revaluation of homes in the face of a mounting backlash.

One in three homes in England - seven million in all - had been expected to move up a Council Tax band in the revaluation. In the South, where house prices have soared, bills were expected to rocket by at least £270 a year in four out of five towns.

Preparatory work for the revaluation has already begun. But ministers are expected to argue next week that it is 'pointless' to proceed while they are awaiting the results of an independent inquiry into the future of Council Tax.

Former Labour councillor Sir Michael Lyons, who is conducting the investigation, will report in December. Sir Michael has called for the revaluation to continue because updated valuations will be central to any reform. So the postponement will prompt accusations that ministers are scared of the political implications.

With the first bills based on the new valuations due in April, the Chancellor is understood to have been alarmed at the potential impact at the next election. Voters have already suffered a rise of more than 70% in Council Tax since 1997, sending bills above £1,000 in some areas.

The depth of public resentment was shown earlier this month when retired vicar Alfred Ridley, 71, was sentenced to 28 days in one of Britain's toughest prisons for refusing to pay part of the latest increase in his bill.

The revaluation would have punished regions of the South, where house prices have risen most since the existing tax bands were calculated in 1991, while favouring Labour heartlands in the North.

A senior Whitehall source said: 'The revaluation exercise will be postponed - not cancelled, but postponed. 'The thinking is that yes, it will be politically sensitive, but it would also seem very strange to go into a revaluation exercise when you are still waiting for the Lyons report.'

The Government had signalled that anyone whose home had risen in value by more than the average - 160% since 1991 - would move up to a new tax band. In the South-West, 81% of towns have seen prices rise above the national average. In the South-East, the figure is 78% and in East Anglia 66%. In the North-East, no towns have topped the average. Moving an average Band D home up to Band E would mean a tax increase of 22%, from £1,214 to £1,484 - a rise of £270 a year.

A revaluation already carried out in Wales led to an average 9% rise in tax bills this year - five times the rate of inflation. A third of homes were moved up to a more expensive band, with only 8% moving down.

Tory spokesman Caroline Spelman said: Council Tax plans are now in disarray. There is no logical link between the cost of emptying your bins and how much your house has increased in value. The only thing for the Government to do is to cancel revaluation outright.' Liberal Democrat Sarah Teather insisted: 'Council Tax is in a desperate mess, and cancelling revaluation does nothing to change that. 'By opting out of meaningful reform, the Government is letting down the millions of pensioners and low-paid workers who struggle to pay their Council Tax bills.

'Revaluation or no revaluation, Council Tax is Britain's most unfair tax. It's time to introduce a fair local income tax based on the ability to pay.' The Deputy Premier's Office said: 'Any statement we make on this matter will be made at the appropriate time'.

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COUNCIL TAX BILLS SOARING - OFFICIAL

FIRST PUBLISHED BY: THIS IS MONEY

COUNCIL TAXPAYERS ARE TAKING A HIT WELL ABOVE THE RATE OF INFLATION, ACCORDING TO GOVERNMENT FIGURES OUT TODAY

The Liberal Democrat MPs immediately slammed the news as being another hidden tax rise from the Government. The figures show that the average Council Tax increase for a band D home in England occupied by two adults will be 6.8 per cent in 1999/2000. The band D level is £798, a rise of £51 on 1998/99.

And the shire counties are taking the largest hit, with rises above those imposed by traditionally high spending councils In London, although many of these have cut services massively to keep bills down.

Average band D Council Taxes in shire areas will be £792, in London £731, and in the Metropolitan areas £878. These figures do not take account of any reductions for Council Tax benefit or transitional relief for reorganised areas.

The average Council Tax bill in England will be £656 in 1999/2000. This figure is lower because most homes are in bands A to C, and discounts go to single people and second home owners. In shire areas it will be £666 in 1999/2000, in London £669 and in Metropolitan areas £621.

Larger than average increases are coming in Torbay, Devon, with a 17 per cent rise and Herefordshire where the rise is 10.8 per cent. Bills in Milton Keynes are also going up by 10 per cent - but only after a referendum of voters backed the rise as being better than huge cuts in local services.

Liberal Democrats said that Tory councils were putting up tax by more than anyone else, but they also warned: "The Chancellors Budget has forced councilors of all parties to tax more but provide less. Increases in Council Tax are a massive hidden Labour tax rise."

If your bill has risen dramatically you'll probably want to challenge it. The bad news is that this is now very difficult, and appeals against valuations of properties or against being put in a higher tax band are rarely successful.

Council Tax valuations are based on what the property would have sold for on April 1, 1991. There was a spate of appeals before the initial cut-off date in April 1993.

Now it usually takes a major change, such as a motorway being built near a home and seriously cutting its value, to get a change in the valuation.

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£60 RISE IN COUNCIL TAX BILLS

FIRST PUBLISHED BY: THIS IS MONEY

COUNCIL TAX IS SET TO RISE BY AN AVERAGE OF ALMOST £60.

From April bills will jump 5%, more than double the rate of inflation, to around £1,220 for a typical household. The bulk of the increase - £34 - will go to pay for more police and prepare London for the 2012 Olympics, an Evening Standard survey has found.

The Mayor's demand, which is due to be rubber-stamped by the London Assembly tomorrow, will increase his share of Council Tax by 13.3% to £289. 

By comparison, London's 33 boroughs are seeking an average 2.5% rise. Five councils have announced plans to freeze their share of the bills with local elections less than three months away. Across London, our survey predicts that benchmark band-D bills will add £58 to the current £1,162 average. Last year bills increased by £41. 'My budget gives every neighbourhood in London its own dedicated police team and funds more transport police to keep overground rail stations safer. That will cost the average Londoner just 27p a week.

'My budget also introduces the 38p a week contribution to the costs of the 2012 Olympic and Paralympic Games, which has the support of all major political parties.' Almost two-thirds of the Mayor's extra cash will be spent rolling out neighbourhood police teams to all 625 council wards in London.

The remainder will provide infrastructure for the Olympics and extra transport police for suburban stations. But the Mayor's demands have sparked anger among London boroughs which are obliged to collect-the money on his behalf. Nick Stanton, Southwark's Lib-Dem leader, described the increases as 'outrageous' and said they would cause real pain for thousands of families.

Mr Stanton said: 'We have a lot of 'working poor' in Southwark who don't get much more than the minimum wage but they get absolutely clobbered.' Michael Lavender, Enfield's Tory cabinet member for finance, said: 'It's outrageous that when we are trying to spend less of Council Taxpayers' hard-earned money, seems to be intent on splashing it around like someone who has just won the pools.'

Hackney, Kensington and Chelsea, Lambeth, Richmond and Tower Hamlets want no rise. They may be joined by Islington and Southwark. Councils will ratify their final budgets next month. Kingston looks set to replace Richmond as the capital's most expensive borough. If a 4.5% increase is approved, this would take its band-D bill to £1,459.

Ian Reid, Kingston's executive member for improvement and performance, blamed a lack of government funding for the high bills. Wandsworth will face competition from Westminster to set the capital's lowest bills. Both are keeping their proposals under wraps but they are likely to be around £655 - just over half the London average.

Kensington and Chelsea has announced a two-year freeze, while Newham and Brent have put forward their lowest increases in years. Hammersmith and Fulham - where Labour will face a tough battle to prevent the Tories gaining control in May - announced a 1.5% rise for each of the next three years and 'no nasty shocks'.

Many types of council have been forced to cut services to keep their increases to a minimum.

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AVERAGE COUNCIL TAX BILL TO TOP £1,300

FIRST PUBLISHED BY: THIS IS MONEY

THE AVERAGE COUNCIL TAX BILL WILL SOAR PAST THE £1,300 MARK IN APRIL, GOVERNMENT FIGURES SHOW.

Local Government Ministers confirmed that most householders face an inflation-busting rise of 5%, adding £63 to the average Council Tax band D bill. This means Council Tax has more than doubled since 1997. Homeowners are already struggling with rising mortgage rates, fuel bills and the cost of living in general.

The Government announced a £26bn Treasury cash injection for councils yesterday, insisting it would prevent 'excessive' tax increases. 

Grants to local authorities have risen 39 per cent in ten years, he said. Tory local government spokesman Caroline Spelman warned, however: 'Regardless of how the Government tries to spin these figures the reality is that working families and pensioners will see their Council Tax bills hit £110 a month.

Many families are really starting to feel the pinch and these latest figures suggest the Chancellor is going to squeeze family incomes even more.' James Frayne, from the Taxpayers' Alliance, said the Government 'talks as if their grants to local authorities will stop the need for tax increases'.

'The fact is that taxes are going to keep going up until national and local politicians start to get a grip on waste and unnecessary spending and start to realise that the money they spend belongs to the public, not them,' he added.

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