COUNCIL TAX COULD RISE TO EASE BENEFITS CUTS

FIRST PUBLISHED BY: THE TELEGRAPH 

WORKING FAMILIES FACE INCREASES IN THEIR COUNCIL TAX BILLS TO PROTECT BENEFITS CLAIMANTS FROM CUTS IN WELFARE SPENDING, ECONOMISTS AND COUNCIL LEADERS HAVE WARNED.

Coalition plans to make local authorities set their own rules for Council Tax benefit could also undermine the Government’s plans for welfare reform, it was suggested yesterday. The Institute for Fiscal Studies analysed Coalition plans to reform the rules for Council Tax benefit and identified a number of potentially serious problems. 

Next year, the Government is planning to scrap the national system of Council Tax benefit, which gives discounts on the tax for low-income households including the unemployed. 

Under the new system, local authorities will be given control of money for Council Tax benefit. The sum available for the benefit will also be cut by 10 per cent. Because Council Tax benefit for pensioners is protected, that cut could mean much larger reductions in areas with large numbers of retired residents.

In parts of Dorset and Yorkshire, for example, working-age claimants would face a 33 per cent cut in Council Tax benefit. The IFS said the 10 per cent cut would leave councils facing a choice between making significant cuts in benefit for working-age households and finding the money elsewhere, either by cutting services or increasing tax. Scotland’s devolved administration has taken the choice to find the money elsewhere, to avoid major cuts in benefit payments.

The IFS calculated that the average English local authority choosing to do the same would either have to cut spending on other services by 0.4 per cent, or increase Council Tax by 1.9 per cent. Sir Merrick Cockell, chairman of the Local Government Association, said that councils are being put in an impossible position and may have to increase taxes.

"Councils are extremely worried about how they're going to protect deserving and vulnerable people from the £500 million cut to Council Tax benefit next year,” he said. “They can either cease helping the working poor, or continue to support them by taking money from other services or putting up Council Tax.” In a report on the Council Tax benefit reform, the IFS suggested that a localised benefit regime could “undermine” the Coalition’s flagship Universal Credit welfare reform.

Universal Credit, due to begin next year, is meant to integrate all benefits into a single system, and ensure that people claimants are always better off if they take paid work. However, Council Tax benefit has been left out of the new system, and the IFS warned that trying to co-ordinate the local and national benefits system would be complex and possibly damaging.

Depending on how councils design their welfare rules, the effect could be to “reintroduce some of the extremely weak work incentives that Universal Credit was supposed to eliminate.” Overall, the IFS concluded, the localisation of Council Tax benefit “has the potential to undermine many of the positive impacts of Universal Credit.”

Bob Neill, the local government minister, said that the Government's reforms were right. He said: "It is right that local authorities, who collect Council Tax, have a strong incentive to put in place a fairer local Council Tax support scheme that helps their residents get back into employment based on local priorities."

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COUNCIL TAX BILLS COULD LEAP TO FUND £54BN PENSION DEFICIT 'TICKING TIME-BOMB'

FIRST PUBLISHED BY: THIS IS MONEY

EXPERTS WARN COUNCIL BILLS WILL HAVE TO RISE SHARPLY IN THE FUTURE TO PAY FOR PENSIONS PAID TO COUNCIL WORKERS, FROM BIN MEN TO TOWN HALL STAFF. 

Britain is sitting on ‘a ticking time bomb’ created by the generous pensions enjoyed by council workers, the report warns today. The shocking analysis reveals councils across the UK have a pensions deficit of £54billion – amid warnings it could get even bigger. Warning: Council Tax bills will have to rise sharply to pay for council workers' pensions, experts believe. The equivalent of around £1 in every £5 of Council Tax is already spent on local authorities’ contributions to their workers’ pension scheme, according to the report by campaign group the TaxPayers’ Alliance.

The average pension paid to a council worker is around £4,200 a year, which covers all council workers, many of whom are on very low pay. But more than 2,700 scoop pensions worth at least £37,000 a year and more than 35,000 get at least £17,000 a year, according to official figures. By comparison, most private sector workers do not have a pension – and it is worth only £1,400 a year to those who do.

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IMF warns Britain may need to raise retirement age faster to avoid a debt spiral. Pensioners who saved diligently for years to see payout income slashed by up to 60% Matthew Sinclair, a director of the TaxPayers’ Alliance, said: ‘The deficit remains a ticking time bomb that is being left for future generations of taxpayers to deal with. ‘With an ageing population and a crisis in public finance, generous final salary schemes, like the Local Government Pension Scheme, are inflexible and too expensive and need urgent reform.’ The report, based on official council figures, says the local government pension scheme has assets of £132billion. But the scheme has made pension promises, known as liabilities, of £186billion to its members – leaving the £54billion deficit, according to the 2010/11 figures.

The biggest culprit is Birmingham City Council, with a deficit of £1.33billion – equal to nearly £1,300 for every resident. Overall, the report says there are 165 local authorities with a deficit of more than £100million. Dr Ros Altmann, director general of Saga and a leading pension expert, said: ‘Taxpayers underwrite the deficit. If it does not come down, they will foot the bill. Future taxpayers – our children and our grandchildren – will be on the hook.’ Tom McPhail, head of pensions research at financial advisers Hargreaves Lansdown, said: ‘Local authorities are going to come under pressure to raise Council Tax to fund these pensions. ‘They are going to have to go to taxpayers, who do not have good pensions of their own, to meet their very generous pension promises. That is not going to go down well with people.’

The average Band D Council Tax bill in England is currently £1,444, one of the biggest monthly costs facing most families after their mortgage or rent and food bill. Bob Neill, the minister for local government, said: ‘These pension bills are costing over £300 a year to every family and pensioner paying Council Tax, diverting funds from emptying bins, cleaning the streets and keeping Council Tax down. ‘Hard-pressed taxpayers simply cannot afford to foot an ever-growing bill.’

Local government workers currently get a final salary scheme, retire at 65 and contribute only between 5.5 per cent and 7.5 per cent of their salary. The Government is currently negotiating changes with unions, including a switch to a career average pension and to link retirement age to the rising State pension age. Sir Steve Bullock, chairman of the Local Government Association’s workforce board, said: ‘Presenting a one-day snapshot is a spurious way of gauging the viability of a pension scheme and this year-old figure has no relevance to the actual cost of local government pensions. ‘Councils have taken steps to ensure the schemes, which are significantly funded by contributions from employees, are affordable for taxpayers, fair to workers and viable in the long-term.’

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COALITION UNDER FIRE FOR COUNCIL TAX BENEFIT CHANGES

FIRST PUBLISHED BY: LABOUR MATTERS.

10% CUT IN EACH COUNCIL’S COUNCIL TAX BENEFIT

Coalition Minister Andrew Stunnell came under fire from MPs of all parties about the Government’s proposals for a 10% cut in each council’s Council Tax benefit budget in a Westminster Hall debate this week. Clive Betts, Labour MP for Sheffield South East and Chair of the All-Party Communities and Local Government Select Committee, said: “It appears that Eric Pickles, the Conservative Secretary of State, doesn’t care about the concerns, and that his Liberal Democrat Under-Secretary of State doesn’t understand them.”

Under the Government’s proposals, the Council Tax benefit budget of each council is to be cut by 10% from 2013 and each council is meant to design a local scheme to achieve that reduction. As the Government is exempting pensioners and the single-person discount from any reduction, the cuts will inevitably fall hardest on low-income working families. Thus, the biggest cuts in Council Tax benefit will be felt by low-income working families in those areas which have the highest proportion of pensioners.

MPs from all parties challenged the Minister about the Government’s proposals:

The biggest cuts will hit working-families in the poorest economic areas harder than in wealthier areas. In areas with a high proportion of pensioners and single-person households, low-income working-families could face a 30%+ cut in Council Tax benefit. The IT software providers to local authorities have consistently said that it will not be possible to have new schemes in place to meet an April 2013 start, because the Government itself is unable to provide the detailed regulations.

Because the Government is centralising housing benefit (under the Universal Credit) but localising different council-tax benefit schemes. This means that for any income changes, people will now have to notify – and provide the necessary evidence to – the council and the Job Centre (or on-line) separately. Big cuts to council-tax benefit will create work dis-incentives at the very time when Government says it wants to make work pay. 

Clive Betts said: “As each day passes, it is becoming clearer to MPs from all parties that the Government simply hasn’t thought things through. “Eric Pickles is relying on local councils taking the blame for cuts and administrative shambles, which are entirely of his making.

“Ministers can’t even answer these three simple but crucial questions: Will universal credit be counted as income in the means test for Council Tax benefit? Will local authorities have access to universal credit data when calculating people’s Council Tax benefit? Do you accept that councils will not be in a position to implement any new system in time for April next year, because the Government is unable to specify the regulations in time?”

Clive Betts continued: “I am really concerned about the way the Government is just moving on and failing to listen. “I just think back to 1999 when Sheffield City Council (then Liberal Democrat controlled) privatised the housing benefit service and transferred it to Capita in a rushed and botched way. “I remember my constituents, often elderly, coming to my surgeries in tears; not because they had done anything wrong, but because the administration of their benefits was in chaos and, as a result, the arrears on their Council Tax and rent had risen. They were distraught because they had never been in arrears in their lives. 

“I am really worried that we will end up in a similar situation next year.”

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LONDON PARISH BACKS BID TO BECOME 'PEOPLE'S REPUBLIC OF QUEEN'S PARK'

FIRST PUBLISHED BY: THE GUARDIAN 

THE CREATION OF LONDON'S FIRST PARISH COUNCIL IN 50 YEARS WINS SUPPORT OF 68% OF VOTERS

The Queen's Park parish council campaign was backed by Westminster North Labour MP Karen Buck. Just days after the launch of the campaign to persuade Scots to vote for independence, the residents of a patch of north London have said "yes" to some autonomy of their own. 

Following a referendum campaign which was little noticed outside of the neighbourhood it concerned, the wheels have been set in motion for the creation of London's first parish council in 50 years – or what may yet come to be known with tongue in cheek as the People's Republic of Queen's Park.

While Conservative-controlled Westminster council was quick to claim the result on Monday was a seal of approval for the government's localism agenda, the campaign in the Queen's Park ward in fact drew support from across the political spectrum, including from the constituency's Labour MP, Karen Buck. The result, announced at Marylebone town hall, revealed that 1,100 residents (68%) backed the creation of a governing entity that will be funded by a precept added to Council Tax bills.

Members of a group of locals who waged a two-year campaign for London's first parish council since 1963 – the bodies were abolished to make way for the Greater London Council – say they want the authority to run community events, look after an allotment, produce a newsletter, support vulnerable locals and engage with other service providers including Westminster council. The first councillors will be elected in May 2014 on the same date as other local elections. Most residents in the area, bordered by Kilburn Lane in the north and Harrow Road in the south, live in social housing. There are high levels of unemployment and significant deprivation.

Angela Singhate, who chaired the yes campaign, said: "The group has been confident all along that a community council is the way forward for Queen's Park and this result demonstrates that we have the backing of the wider community." Buck said: "Something very exciting is happening in Queen's Park. I am incredibly proud of the community and of those who have thrown themselves with such enthusiasm into preparing for community self-government. "I am looking forward to working with them for a safer, healthier and happier Queen's Park."

Philippa Roe, the leader of Westminster council, has said the council held the referendum because it saw opportunities created through "greater civic involvement and participation". Her deputy leader, Robert Davis, said the referendum result amounted to "a fitting endorsement of the government's ambitions for localism and neighbourhood engagement".

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FRAUD AND ERRORS WORTH MORE THAN £20M IN PUBLIC SECTOR

FIRST PUBLISHED BY: BBC

OCCUPATIONAL PENSIONS WERE PAID TO 179 DEAD PEOPLE

More than £20m in fraud and incorrect benefits and pensions payments have been identified in the public sector. Identified losses included 179 occupational pensions being paid to dead people and 405 incorrect benefits payments to public sector staff. The National Fraud Initiative collected information from 74 public bodies including councils, health boards and the Scottish Public Pensions Agency.

This is the third such initiative totalling about £58m in savings. Public spending watchdog Audit Scotland said £21.1m was saved by recovering cash which had been paid out as a result of fraud, overpayment or errors. Savings were also made by preventing money from being wrongly paid out. 

The report warned that although it had been successful in identifying considerable fraud and mistakes, most data was collected before the start of the recession. An economic downturn is commonly linked to a heightened risk of fraud and public bodies have been advised to remain vigilant.

Auditor General for Scotland Robert Black said: "Most people are honest and behave with integrity. Some do make genuine mistakes, but there is a small number who set out to cheat the public sector. "The National Fraud Initiative helps public bodies save and recover money by identifying cases where payments such as pensions and housing benefits are being wrongly paid to people, either through human error or incorrect information.

"It also helps them detect deliberate fraud."

Two wages

In one case, a council employee who had moved to another council was not taken off the payroll by the previous employer and ended up being paid by both local authorities for almost two years. The council was not informed of the error and the worker was incorrectly paid about £98,000. The local authority is trying to recover the money and a report has been sent to the procurator fiscal.

Councils have also stopped or reduced housing benefit payments to 1,447 public sector workers and pensioners. In 4,322 cases the single person's Council Tax discount was withdrawn for being invalid. And 4,340 blue badges for disabled people were cancelled because the holder was dead.

New powers

The auditors said 220 cases had resulted in sanctions being applied, such as 89 cases in which suspected frauds had been reported to the procurator fiscal. A total of 18 workers have either been dismissed or have resigned from their job. Audit Scotland will carry out its next anti-fraud exercise in October, by which time it is expected new powers will allow more collaboration between other UK agencies to detect cross-border fraud. The range of public sector bodies involved could also be extended and the next exercise could also detect crimes other than fraud.

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