COUNCIL TAX BLOW FOR SECOND-HOME OWNERS

PUBLISHED BY: THE TELEGRAPH

OWNERS OF SECOND HOMES ARE TO LOSE COUNCIL TAX DISCOUNTS IN A MAJOR SHAKE-UP TO BE ANNOUNCED BY MINISTERS. 

The package of measures, to be unveiled by Eric Pickles, the Communities Secretary, would be the first major changes to the tax since it was introduced in 1993, in the wake of the failed poll tax.

Local authorities will be told they can abolish the rebate, which can mean Council Tax on second homes is as much as 50 per cent lower than for main residences. Ministers say the proposal will benefit hard-pressed middle-income families - but it will be unpopular with second-home owners. It will form the centrepiece of a series reforms which ministers say if adopted, would allow a cut in Council Tax bills for most people.

The bill for a Band D property, whose average this year is £1,196, could be reduced by around £20 according to coalition sources. Council Tax bills have already been frozen this year and will be again from next April. The package of measures, to be unveiled by Eric Pickles, the Communities Secretary, would be the first major changes to the tax since it was introduced in1993, in the wake of the failed poll tax.

It includes an end to discounts on empty properties, which can be up to 100 per cent, in an attempt to increase the available housing stock. Mr Pickles will also pledge to review the current system which sees tax inspectors treating "granny flats" as distinct properties, meaning families who house a relative in an annex face two separate Council Tax bills. Councils will, furthermore, be encouraged to offer discounts to householders who pay bills via the internet while ministers propose letting Council Tax payers pay their bills over 12 months, rather than over 10 months as at present.

They will also cancel a complex and unpopular planned tax increase on homes with "rent a roof" solar panels, which had faced the same levels of tax as businesses which install the panels. Mr Pickles's statement is expected to confirm that there are no plans for an expensive total re-valuation of all 21million homes in England - with sources saying this effectively rules out attempts by Liberal Democrat ministers to impose a "mansion tax" on owners of the highest-value properties.

Labour had worked on a revaluation but never implemented it. One which was implemented in Wales in 2005 was hugely unpopular as a third of homes were placed in a higher band.

Lib Dems are likely, however, to welcome the main thrust of Mr Pickles's proposals, which will give local authorities the "flexibility" to reduce or remove entirely the current system of tax relief on second homes, many of which are kept as holiday lets. Discounts can be worth hundreds of pounds a year. 

Such a move was called for earlier this year by Shelter, the homeless charity, which claimed it would save £42million a year. It was also proposed by Tim Farron, the Lib Dem president whose Westmorland and Lonsdale constituency has more than 3,200 second homes, last year. Four out five councils are understood currently to offer the minimum 10 per cent discount - suggesting they would welcome the chance to abolish the relief entirely - while one on five offer more, up to a maximum of 50 per cent. 

In the last 20 years, second-home ownership has grown dramatically, particularly in coastal areas such as Cornwall, Cumbria and Norfolk, where some claim it pushes up property prices and makes it harder for local people to get on the property ladder. In 2009, there were a total of 245,384 second homes in Britain, according to a survey by Knight Frank, the estate agents.

Mr Pickles is also targeting the up-to-100 per cent discounts on empty properties. Sources emphasise, however, there are no plans to change the rules on relief for "exceptional circumstances" such as homes left empty because someone has died, been moved to hospital or a care home or has moved in with someone else to be a carer.

Instead, ministers are seeking new powers to tax banks and other lenders who repossess homes, forcing occupiers to leave, and then keep the properties empty. They are also encouraging councils to do more to get Council Tax payers to pay bills online rather than by post in other "hard copy" formats. Mr Pickles said last night: "Under Labour, Council Tax went through the roof. This Government has scrapped Labour's Council Tax revaluation and is helping freeze Council Tax for two years.

"I want to do more to help everyday families with their cost of living, and protect family homes from tax increases. "By removing the subsidised tax breaks for empty homes and second homes, we can cut £20 a year off families' Council Tax bills by treating everyone equally and fairly. "Councils should make it easier to pay bills, and offer the same discounts for electronic billing that other companies offer as standard – this will cut paperwork and help reduce tax bills."

The current Council Tax "freeze", which came in this year, will be extended to cover next year at least, after an announcement by George Osborne, the Chancellor, at this month's Conservative Party Conference in Manchester. Mr Osborne said he would use an £805 million "dividend" from a Whitehall under-spend to pay for the freeze, saving an average family £72 a year.

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COUNCIL TAX – ARE WE ALL IN IT TOGETHER?

FIRST PUBLISHED BY: THE GUARDIAN 

WITH MULTIMILLIONAIRES ACCUSED OF SALTING CASH IN OFF-SHORE HAVENS AND GENERALLY NOT PAYING THEIR WAY, MILES BRIGNALL LOOKS AT THE HUGE ANOMALIES IN COUNCIL TAXES

Fancy a six-bedroom, six-bathroom, house in one of London's smartest streets, a stone's throw from Buckingham Palace in the heart of Westminster? It might only have two reception rooms, but it is newly restored, comes with a fine roof terrace, and can be yours assuming you can stump up the £7.45m asking price.

Or maybe you live in the real world. The three-bed semi pictured above in Newark, Nottinghamshire has two reception rooms, like the house in Westminster. It has been extended and, according to the estate agent marketing it, it's in immaculate condition. The owners are hoping to get close to the asking price of £154,950.

But despite inhabiting two very different worlds, the owners of these two homes pay almost exactly the same in Council Tax – a little over £1,300 a year.

Over the next few weeks millions of householders across the UK will receive their Council Tax demands for the coming year and, amid spending cuts and tax rises, more and more people will be asking why the rich pay so little on their multimillion pound properties.

This week the Lib Dem business minister Vince Cable indicated his party was ready to scrap the 50p top rate of tax in exchange for a new mansion tax. "Basically, you get people with multimillion-pound properties paying exactly the same Council Tax as somebody in a three-bedroom semi," he said. "So the system doesn't work."

His party has proposed a higher levy on homes worth £2m and more. However, conservative MPs in London are already lining up to oppose such a tax.

Malcolm Rifkind, MP for Kensington and Chelsea, said 81% of properties affected would be in London, half of which are in his constituency. In an article this week he suggested the levy would be "arbitrary, disproportionate and unfair" and declared himself "resolutely opposed to such a tax".

But his arguments may fall on deaf ears in other parts of the country, which have suffered Council Tax rises at a time of flat or falling wages, and where the disparity between London and the rest of Britain looks less and less sustainable.

Westminster, with some of the world's most expensive real estate, imposes some of the UK's lowest Council Tax bills. No home in the borough is charged more than the band H charge of £1,375 a year. All properties that were worth more than £320,000 when the calculations were last made in 1990 are placed in the top band – irrespective of whether they are now worth £10m or more.

The residents of Newark, by contrast, pay some of the UK's highest Council Tax charges. The band B house above is charged at £1,311 a year. Someone living in a top band H house in the town pays £3,373 a year – almost two and a half times as much as in Westminster. Yet Nottinghamshire is an area with below national average incomes.

But this is by no means a problem limited to Nottinghamshire. Across Britain, many families who live in distinctly average homes are paying a month's income to their local authority in Council Tax.

Stevenage in Hertfordshire, 30 miles north of London, charges a family living in a mid-range band E house £1,778 a year. Compare that with those living in a band E home in Putney or Wimbledon in leafy (and very expensive) south-west London who are paying less than half that amount: £863 a year.

Those lucky enough to be living in one of the area's multimillion pound homes – around Wimbledon Common pay the top rate of Council Tax of just £1,413 a year.

And it is not just the flagship Tory boroughs in London that are imposing relatively modest bills. Someone with a band E home in Southwark, a Labour-controlled borough in south London, pays £1,493 a year. In Newark a home in the same band attracts an annual £2,436.

A home in Dulwich village in Southwark, on sale for £4.35m has a Council Tax bill of £2,443. But a band F house in Bicester, near Oxford, which would sell for around £425,000, attracts a bill of £2,222.

A four-bed detached house in Newcastle-under-Lyme, a smart area near Stoke-on-Trent, is on the market for just under £400,000. It is in band F, and its owners will pay an annual Council Tax bill of £2,095 – slightly less than the tax the £4.4m Dulwich home attracts.

Council Tax rates are set by local councils with local accountability, but the furore over low rates for millionaires – plus growing evidence that the rich also avoid paying stamp duty by registering assets offshore – has turned it into an issue that increasingly divides the coalition government.

Last week the Chartered Institute of Public Finance and Accountancy said 85% of local authorities will freeze Council Tax for this financial year. But because the authorities that are increasing their charges also tend to be the bigger districts with more households, it warns that 43% of homes will see some increase for 2012-13. 

The Department for Communities and Local Government has urged councils to freeze Council Tax this year and offered them funding to do so. Of those authorities increasing tax, none are increasing by more than 4%, it says.

Meanwhile, this year's Council Tax bills are about to start going out to homes across the country. When yours arrives will it be closer to Westminster or Newark?

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

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END OF REFORMS

FIRST PUBLISHED BY: THE GUARDIAN

ONE BY ONE THE OPPORTUNITIES THAT LABOUR COULD HAVE SEIZED TO ENSURE HISTORIC SOCIAL REFORMS ARE BEING DROPPED.

First, just before the last election, Tomlinson's comprehensive reform of 14 to 19 education was wrongly dropped. Just after the election, the government made it clear pension reform would have to wait for a fourth term. Yesterday, a long-delayed Council Tax revaluation, on which work had belatedly just begun, was called off and will not come back before a fourth term. 

What was already a regressive tax, which Labour pledged to reform in 1998, now looks set to be still in operation in 2010.

Each year of delay will make it more regressive. The eight bands into which the country's 22 million homes are currently divided are headed by a top-rate band valued at £320,000 or over. But in a country with ever-growing numbers of £1m homes, this has merely provided the wealthy with an unacceptable escape hole.

Although the top band pays three times as much as the bottom, researchers have shown that the 10% of poorest Council Tax payers are spending proportionately four times as much of their income in Council Tax as the richest 10%. So much for the state of Labour's commitment to social justice.

What caused the postponement? Ministers claimed it was the new wider remit they had given to Michael Lyons' inquiry into local government funding. This was a threadbare excuse, which will fool no one. Whatever Sir Michael finally concludes, some form of domestic property tax will be included in the package. There is hardly a developed state that does not have one. 

A government that has rightly noted the role that assets play in widening inequalities, could not contemplate dropping such a tax. Sir Michael was ready to have a one-year delay, but not five. The last valuation was carried out in 1991. As Sir Michael noted, the credibility of the tax depends on regular revaluations.

The real cause of the postponement was fear of a voter backlash. In Wales, where revaluation has taken place, 60% remained in the same tax bracket but a third ascended into a higher one. In London and the south-east this proportion would have been even higher. Ironically, postponement will make the inevitable change more difficult. 

What should have happened, which Labour committed itself to doing in 1998, was a revaluation of all homes plus a restructuring of the eight bands. Ideally, there should be two further ones at the top, and one more at the bottom to help the less well-off.

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TEESSIDERS WARNED OF COUNCIL TAX BENEFIT CUTS FIRST PUBLISHED

FIRST PUBLISHED BY: GAZETTE LIVE

NEARLY 37,000 TEESSIDERS COULD HAVE THEIR COUNCIL TAX BENEFITS SLASHED FOLLOWING THE AXING OF A GOVERNMENT-RUN SYSTEM.

Today, the manager of Middlesbrough Citizens’ Advice Bureau said he was “concerned” that the change to the system could lead Teessiders turning to “exploitative” high interest loan companies. Some 62,097 people in our area claim Council Tax benefit, according to figures released by the three local authorities.

Although pensioners are protected from the benefit reductions, 36,898 claimants could face cuts when the local Council Tax support scheme is implemented. The three local authorities spend £55.15m per year on Council Tax benefit. Under the new scheme, each Teesside council would have around £2m less.

But Teesside councils are facing a number of cost-saving measures as more than £100m needs to be slashed between them in the next four years due to Government cuts. Council Tax benefit is income-related and can be claimed by anyone who is liable to pay Council Tax in respect to their main residence. 

It is a national benefit with rules set by central Government and administered by local councils. But from next April the system will be scrapped and local councils will introduce their own local schemes. In scrapping the scheme the Government is also making 10% less cash available to councils for the benefit. As pensioners are protected, this means 20% less cash for the remaining claimants. Councils have until the end of January to notify the Government of their local schemes. If they refuse to implement a scheme then the Government will impose a scheme on a local authority.

John Daniels, manager of Middlesbrough Citizens’ Advice Bureau said the replacement of Council Tax benefit will happen at the same time as a number of other changes to the benefits system. He said: “The overall effect will be that many people already on low incomes will be even worse off.

“We are particularly concerned that people will resort to exploitative high interest loan companies, and as a result their financial position will become even worse.”

He urged people struggling with their money to seek advice as soon as possible.

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BENEFIT CLAIMANTS FACE 'A GOOD KICKING', WARNS COUNCILLOR

FIRST PUBLISHED BY: CAMBRIDGE NEWS

BENEFITS PAID TO HARD-UP RESIDENTS WILL BE CUT TO HELP COUNCILS SAVE MILLIONS OF POUNDS.

Claimants in south Cambridgeshire have been warned they face a “good kicking” under changes to Council Tax benefits. Options include restricting the level of support to claimants with less saved than the current limit of £16,000, and capping payments to the equivalent of a certain type of property, for example, a band D house in Council Tax terms.

Other ideas could see the end of backdating of payments and the entitlement to a second adult rebate. The savings are needed because the Government is passing on responsibility for the handout from next April but will provide 10 per cent less cash to distribute – about £600,000 each for Cambridge City Council and South Cambs District Council annually.

Pensioners and the vulnerable – such as the disabled and single parents with children aged under 5 – are protected, and as these amount to more than half of all claimants in both districts, the remainder will have to take on a greater burden.

Cllr Sebastian Kindersley, opposition leader on the district council, said he had “no grave misgivings” about the options at the latest cabinet meeting. He said: "We are giving the poorest people in society a good kicking".

“My concern is that we’re going to make a whole lot of people more vulnerable.” Exemptions in the city and in south Cambridgeshire for vacant and second homes are set to end, while charges for long-term empty properties are likely to be increased. The district council has already ruled out setting a maximum period of paying benefits, and including other benefits in assessments of income, and the city council says it wants to avoid this.

Cllr Simon Edwards, the district council’s deputy leader, said the changes could be used to encourage people back into work. He said: “We recognise the national cuts to funding mean there are tough decisions ahead. “We need to have plans that encourage people who are able to work to get back into employment.”

Cllr Julie Smith, the city council’s executive member for resources, said: “We have to make sure we don’t end up in a position where the books don’t balance but my strong preference is to find a way of ensuring the levels of Council Tax support remain roughly as they are at the moment.”

A district council consultation will run from August 1 to October 5.

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CHARITY DEMANDS WELFARE POLICY RETHINK

FIRST PUBLISHED BY: THE GUARDIAN

HOMELESSNESS GROWS

Charities have called for a "rethink of damaging welfare policies" after official figures revealed that levels of homelessness rose in 2011-12, while the number of homes being built fell. 

The number of cases in England of homelessness "prevention and relief" – whereby councils secure accommodation for people about to lose the roof over their heads – increased by 5% to 199,000 in the year to March 2012. The worst affected region was the north-east, where there were almost 12 cases per 1,000 households registered by local authorities.

This only will increase your Council Tax bill overtime and at the same time fewer homes appear to be being built, exacerbating the housing crisis. Government statistics show annual housing starts totalled 98,670 in the 12 months to June 2012, down 10% compared with the year before, and this quarter is 24% down on the same quarter last year.

In response, the government published a reporton Thursday entitled Making Every Contact Count, which details the "vital support, such as repossession, tenancy or debt advice and rehousing services that can set many people back on track before they face losing their home". However, Crisis, the homelessness charity, pointed out that more and more people are being forced from their homes as the recession bites and they are unable to meet the rent or mortgage.

Last week the Ministry of Justice released data showing eviction court orders for the last 12 months stood at 100,825. This is up 7,509 or 8% on the 93,316 of the previous 12 months. The charity pointed out that "the report was released on the same day as shocking new statistics reveal: rising evictions, increased cases of councils needing to step in to save people from homelessness, and falling house building".

Leslie Morphy, chief executive of Crisis, said: "This report is a disappointment and a missed opportunity. It contains some worthy ambitions, but lacks detail about how they will be delivered and fails to tackle the key issues. As the government's own statistics make clear, homelessness and evictions are continuing to rise yet new house building is falling.

"We need a housing policy revolution that would guarantee no homeless person is turned away without the help they need, a rethink of damaging welfare polices and a dramatic increase in housing supply."

The latest statistics from the Department for Work and Pensions show that in May the total number of people receiving housing benefit was 5.03 million, up almost 20,000 in a month, with most of the rise accounted for by people in work claiming support.

Jack Dromey, the shadow housing minister, said: "Today's figures show there has been a rapid increase in the number of people seeking help as a result of the Government's failed economic and housing policies – a double-dip recession made in Downing Street and sharp falls in house building.

"The best prevention measure the Government could take to tackle this growing crisis would be to get the economy moving by adopting Labour's plan for a tax on bank bonuses to build thousands of affordable homes and create up to 100,000 jobs for young people."

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IT'S NONSENSE TO CALL THIS A RETURN OF THE POLL TAX

FIRST PUBLISHED BY: THE GUARDIAN

THIS BILL GIVES COUNCILS MORE CONTROL OF THEIR BUDGET AND THE POWER TO GENERATE MORE REVENUE THEMSELVES.

Polly Toynbee calls our benefit reforms a "social injustice" She must be living in cloud cuckoo land. While Labour was in power, Council Tax benefit bills doubled, fostering a culture of welfare dependency, and public debt spiralled out of control. 

The coalition was formed to set it back on course by getting public finances under control again, giving people more power, and creating new conditions for growth. The local government finance bill, labelled "idiocy" by Toynbee, achieves all three. 

Toynbee says that, "from next April, the benefit is cut by 10%". Yes, because of that financial mess left behind we've had to ask councils to make a small 10% saving when they take charge. But she then says, "Each council must choose who is 'vulnerable'" and "people who live in areas with a lot of pensioners or a lot of the 'vulnerable' will suffer the biggest cuts, as much as 30% or more". 

She calls it "a lottery". But a quick check of government policy shows we are putting councils in charge because they can better target local needs. It makes perfect sense for councils to control who gets support, because Council Tax is a local tax. Councils set it. Councils send out the bills. Councils collect it. You actually have to ask yourself why it was ever remotely controlled by Whitehall in the first the place.

Ms Toynbee claims each council must "become a mini DWP" and "must collect smallish sums from millions of families who have never paid before, with new billing and recovery processes". But councils already administer the benefit, so they have the expertise to successfully take full control and keep disruption to a minimum.

And is Toynbee really saying she does not trust local councils – including 100-odd Labour councils and 6,500 Labour councillors – to provide Council Tax support fairly? We know councils are much better at finding efficiency savings than Whitehall. I know many are using that local know how to look across their whole budgets to do so. And money is available from £60bn spent on procurement, or the £2bn lost to fraud, or even the £10bn kept in reserves.

The bill also gives councils more control of their budget and the power to generate more revenue themselves, which could be used for Council Tax support. This new local growth incentive could add £10bn to our GDP and will end the begging-bowl handout humiliation that proud councils endure every year.

Toynbee also, rather out of character, bemoans state protections for elderly and vulnerable people. This government, unlike the Labour party, has no intention of letting councils end support for single-person households. It would hit 8 million people with a new tax rise. That would be the history-repeating she decries. Surely she must agree that we should not punish vulnerable single mums or the fixed-income pensioners who have contributed a lifetime of work and taxes already, simply because they live alone.

This bill is vital for the country's future. It will restore the confidence of hardworking taxpayers in the Council Tax support system by making it a fairer one, a local-run one, and a more affordable one - one where residents get local help to find employment and where work pays.

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

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