COUNCIL TAX COVER-UP - THE TRUTH IS OUT

FIRST PUBLISHED BY: HARROW EAST 

NEW EVIDENCE OF SERIOUS ERRORS IN COUNCIL TAX BILLS - LABOUR'S COUNCIL TAX COVER-UP

The last Government and the Ministers are responsible for deliberately covering up serious problems over the banding of homes for Council Tax, Bob Blackman, Conservative Parliamentary Candidate for Harrow East, warned. New figures have revealed that Whitehall's Council Tax snoopers have been forced to redo the Council Tax bands of thousands of homes after appeals by householders across Harrow and the country.

Official papers from the Government Council Tax inspectors, the Valuation Office Agency, have admitted that many homes are in the wrong band for Council Tax and families have been paying over the odds for years. Accidentally leaked minutes have confessed that if the tax errors became known, the Government would lose money and would have to pay tax refunds. This was also ruled out since it would generate "adverse press coverage… in the current climate".

The combination of a campaign by 'Money Saving Expert' Martin Lewis, the publication of these leaked minutes and the ITV Tonight documentary, has produced a surge in Council Tax appeals. Now Parliamentary Questions have forced the Government to publish detailed figures on the changes to Council Tax bands. In the last five years, 500,000 existing homes have had their Council Tax band changed: 133,985 homes have moved down a band. In Harrow alone, 321 homes have moved down a Council Tax band as a result of appeals. This proves there are serious and systematic errors in the banding of homes, which Ministers have been covering up to save money.

Wales has been used as a test-bed for a Council Tax revaluation. Three times as many homes moved up a band as down. Yet since that 2005 revaluation, a succession of errors has also been uncovered with the Valuation Office Agency's work. To date, 1 in 20 homes in Wales have had their post-revaluation banding corrected. A wholesale Council Tax revaluation has thus caused more problems than it solved.

Bob Blackman said:

"We now have clear evidence of a Council Tax cover-up. The Labour Government has been caught red-handed fiddling Council Tax to make families in Harrow and across the country pay more. Whitehall bureaucrats know that many homes across the country are wrongly banded, but have refused to correct the tax inspectors' errors to save the Government money and save face. "The whole basis of our tax system is undermined if the state conspires to over-charge the public. Labour Ministers only want to reform the Council Tax system if it rakes in extra cash for the Government coffers."

Council Tax bills vary according to the banding of a property; for example, a Band E house pays 22% a year more than a Band D house (or £315 a year more for a typical home in England). Last year, Labour Ministers were forced to publish the minutes of the Valuation Office Agency's Council Tax Revaluation Programme Board. The Valuation Office Agency are England's Council Tax inspectors, and are an arm of HM Revenue & Customs. The minutes show the fallout after the controversial plans for an English Council Tax revaluation in May 2007 were postponed in October 2005. The Revaluation Board minutes include a series of comments which are blacked out, since they relate to "an ongoing policy issue".

The secret comments show that the revaluation exercise identified certain homes in certain streets were currently wrongly banded, and are paying over the odds (so-called 'consequential'). Yet Ministers covered up this information due to the implications: having to pay refunds and lose money and the subsequent bad press coverage. The secret minutes stated: "What action should be taken by Groups on consequential identified following data enhancement. Concern was expressed about the possible knock on implications for billing authorities and adverse press coverage this could generate in the current climate. Action Point to establish potential numbers involved with GVOs. Action will then be agreed with ODPM and Ministers".

SURGE IN APPEALS REVEALED WIDESPREAD ERRORS

Financial guru, Martin Lewis ('Money Saving Expert'), has run a big campaign on errors in Council Tax banding, highlighting errors by the Valuation Office Agency. Combined with the cover-up exposed by Conservatives, this has lead to a surge in the number of Council Tax appeals.

The BBC said: http://news.bbc.co.uk/1/hi/business/6296849.stm BBC News Online, "Homeowners must check tax band", 25 January 2007. When a home is placed in too high a Council Tax band, any subsequent refund can date back for years, incurring considerable cost to the Exchequer. New Parliamentary Questions by Conservatives have forced Ministers to publish new details exposing the scale of errors to existing Council Tax banding of homes across England, following that the surge in appeals.

"Mr. Stewart Jackson: To ask the Secretary of State for Communities and Local Government with reference to the supplementary memorandum from the Valuation Office Agency presented to the Treasury Select Committee, dated 29 October 2008, which amendments to the Council Tax valuation lists involving movements to a lower band were made in each billing authority in each of the years to March (a) 2006, (b) 2007 and (c) 2008.

John Healey: This information is currently being assembled for publication. I will place a copy in the Library of the House as soon as possible."

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

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THE POLITICS OF PENSIONS SCHEMES

FIRST PUBLISHED BY: LOCAL GOVERNMENT

IF COUNCIL TAXPAYERS FIND OUT HOW MUCH OF THEIR MONEY GOES ON COUNCIL PENSION SCHEMES THEIR COULD BE A BACKLASH

The TaxPayers’ Alliance has found a £54 billion deficit in UK local authority pension funds. Defenders of council pensions say these schemes are fully funded. Both are correct. You, the Council Taxpayer, are required to honour promises made to pension scheme members. If Local Government Pension Scheme (LGPS) funds deliver insufficient returns to meet promises to LGPS members’ councils have to make up the difference. 

The £54 billion deficit means that pension fund returns are not matching promises made to scheme members. Eliminating this deficit will mean higher Council Tax bills or bigger cuts to local public services. 

Merton Council explain the situation very well in their annual pension fund disclosure 2010/11. “The LGPS provides defined pension benefits determined by national regulations. The benefits are mandatory, and not subject to local amendment or Pension Fund performance and they are adjusted for inflation. 

The liability to pay these benefits, both currently and in future years is financed by employee and employer contributions and income from investment of the Pension Fund. The scheme has to be fully funded (i.e. employer contributions must be set to meet 100% of existing and prospective pension liabilities including pension increases) or have a plan to become so.

"Employee contribution rates are set by statutory regulations. They are fixed. Employer’s contribution is determined by an actuarial review that takes into account both the amount of employee contribution and the value and investment return of the Pension Fund. Thus the amount and performance of Pension Fund investment is significant to the level of the employer’s contribution, and determines the need for effective management of the Fund.” 

The LGPS scheme does not allow for councils to increase employee contributions if the performance of pension fund investments does not meet the promises to current and future retirees. Consequently councils are making up the difference by increasing employer contributions.

Council Taxpayers in areas with significant pension fund deficits could face substantial tax increases or cuts in public services over time. The TPA has produced a calculator which allows private sector workers to see what they need to earn to match the total compensation package provided to public sector workers. UNISON has produced two calculators showing how current government proposals will reduce benefits and increase member contributions. These tools show how council pension schemes could become a significant issue in local campaigns.

How long before Council Taxpayers can see how much of their individual tax bills go to fund council pension funds? Eric Pickles could require councils to put this information on Council Tax bills. Local authorities with significant pension deficits might then lobby government to reduce members future benefit levels or allow councils to increase employee contributions.

DCLG could allow councils to increase employee contributions further where pension deficits are excessive. The local taxpayer should not have to meet the whole cost of these deficits.

Trade unions would fiercely resist these changes but they would serve to moderate trade union demands over time. Trade unions could change from defending the unsustainable current pension fund schemes to policing pension scheme affordability. 

Councils seeking to take a payment holiday and contribute less to pension schemes (as some were encouraged to in the nineties) would face the wrath of their local trade union representatives. Few trade unions would seek unaffordable pensions if they knew their members would have to pay higher contributions to meet the additional costs. The LGPS might become more sustainable and fair.

The average employer contribution to local government public sector pensions has reached eighteen per cent of salary. The TPA reveals that £1 for every £5 raised in Council Tax is going to fund council pension funds. Employers contributed just over £5 billion in 2010-11 and Council Tax raised £25.7 billion that year. This will increase over time. Council pension scheme deficits vary significantly.

This issue could play out differently depending on the size of the local deficit and the local taxpayer contribution. Chichester is 100 per cent funded with assets exactly matching obligations to current members and future retirees. Brent is 42 per cent funded; pension liabilities massively outweigh the schemes assets. The politics of council pensions could be very different in Brent and Chichester.

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

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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".

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

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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.

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

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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.’

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

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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.

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

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