IS YOUR COUNCIL TAX SET TO SOAR?

FIRST PUBLISHED BY: MONEY.UK.MSN

WITH £54 BILLION MISSING FROM COUNCIL PENSION SCHEMES, BRACE YOURSELF FOR HIGHER TAXES.

Burgeoning pension fund deficits could trigger a sharp hike in Council Tax bills, a tax organisation has warned. Councils across the UK have a combined pension deficit of more than £54 billion in 2010/11, according to new research from The TaxPayers' Alliance (TPA).

Put another way, the UK's 101 local authority pension funds have total liabilities calculated at £186.6 billion and total assets worth £132.4 billion. This difference represents a huge 'black hole' at the heart of the Local Government Pension Scheme (LGPS).

Your share could be £1,125

To put this £54 billion shortfall into context, it averages out at £1,125 for each of the UK's 48 million adults. Ultimately, taxpayers will be held liable for this deficit, so we could be facing some steep increases in our Council Tax bills, plus other local taxes such as parking charges and fines.

In previous research, TPA estimated that a fifth (20%) of all Council Tax is spent on funding employer contributions to the LGPS. In other words, if your Council Tax bill this year is £1,500, then around £300 of this goes towards topping up your local council's sickly pension scheme. As a result, TPA argues that the LGPS is "much more generous than most private-sector pensions and is in urgent need of reform."

The only good news is that this huge deficit fell from £91 billion in 2009/10 to £54 billion in 2010/11, largely thanks to a sharp recovery in share prices. Then again, this is still £3 billion more than the £51 billion shortfall recorded in 2008/09, so things have got worse instead of better since the recession.

20 councils with big 'black holes

According to TPA figures, these 10 councils had the largest pension deficits in 2010/11.

COUNCIL	DEFICIT (£M)	FUNDING LEVEL	DEFICIT PER PERSON
Birmingham	£1,340	67%	£1,292
Durham	£728	63%	£1,424
Hampshire	£718	64%	£554
Leeds	£650	75%	£814
Essex	£633	67%	£448
Lancashire	£629	73%	£538
Glasgow	£625	79%	£1,054
Brent	£582	42%	£2,267
Staffordshire	£568	66%	£684
Sheffield	£563	70%	£1,014

As you can see, Birmingham has the biggest pension shortfall, weighing in at a hefty £1.34 billion, or £1,292 for each of its 1,037,000 citizens. Genteel Durham has the second-highest black hole, at £728 million (£1,424 per head). In third place is Hampshire, with a deficit of £718 million, which comes to £554 per head.

Another problem is that some pension funds are much better funded than others. The average funding level for all LGPS plans is 70% of their liabilities. However, of the top 20 councils, three have assets worth less than three-fifths (60%) of their liabilities. These are Brent (London), with a funding level of 42%, Rhondda, Cynon, Taff in Wales at 53% and Welsh capital Cardiff, with a 58% funding level.

In total, TPA identified 26 councils with funding levels below this critical 60% level. Brent was the worst by far, but other councils with pension-funding problems include Merthyr Tydfil, South Wales (50%), Craven, North Yorkshire (52%), Worthing, West Sussex (52%) and Havering, London (55%).

The biggest bills per head

TPA also identified those councils with the highest pension shortfalls per head of population. These are the 'top 10' in this category.

COUNCIL	DEFICIT (£M)	FUNDING LEVEL	DEFICIT PER PERSON
Merthyr Tydfil	£126	50%	£2,268
Brent	£582	42%	£2,267
Rhondda, Cynon, Taff	£483	53%	£2,063
Gateshead	£391	62%	£2,040
Neath, Port Talbot	£275	59%	£2,001
Hackney	£423	61%	£1,931
Hammersmith and Fulham	£322	59%	£1,899
Newham	£413	61%	£1,718
Blaenau, Gwent	£117	65%	£1,708
Lambeth	£472	61%	£1,660

Merthyr Tydfil has a shocking pension problem, with a deficit amounting to £2,268 per head, which is more than double the £1,125 average I calculated above. Brent is just behind on £2,267 per head and Rhondda, Cynon, Taff takes third place with a deficit per person of £2,063.

While London and Wales dominate the list above, the situation looks bleak across the country. This is a problem for every household paying Council Tax throughout the UK. Indeed, every one of the 434 councils in this survey - from Aberdeen City to York - has a pension deficit, although it's a tiny £3 per head at the Greater London Authority and in Chichester, West Sussex.

Pension promises we can't keep?

Frankly, I find this survey to be deeply disturbing. Clearly, councils with huge pension black holes will have to fill them somehow - and this burden will fall on ordinary taxpayers. However, with Brits struggling to pay their own household bills and pension contributions, it's a bit much to ask them to fork out an average £1,225 extra per person towards sorting out council pensions, too. Hence, Matthew Sinclair, director of the TaxPayers' Alliance, is calling on the government to urgently reform pensions.

"The deficit in the Local Government Pension Scheme remains a ticking time-bomb that's being left for future generations of taxpayers to deal with," said Sinclair. "With an ageing population and a crisis in the public finances, generous final-salary schemes like the LGPS are inflexible and too expensive, and need urgent reform. "Councils should not take false comfort in the improvement in the stock market. Their pension liabilities continue to far outweigh their assets and the situation remains worse than two years ago."

In summary, unless councils take action to increase employee pension contributions, freeze current entitlements, reduce future payouts and increase their retirement age to 65, then taxpayers could be clobbered with yet more rounds of steep rises in Council Tax.

This will not be a welcome move, especially as many councils have already ignored the call by Secretary of State for Communities and Local Government Eric Pickles to freeze Council Tax in 2012/13.

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

ARE YOU PAYINGTOO MUCH COUNCIL TAX - CHECK HERE

COUNCIL TAX FREEZE SPLITS TORIES

FIRST PUBLISHED BY: BBC

COUNCIL TAX FREEZE SPLITS TORIES

The government's drive for a Council Tax freeze has brought tensions with council leaders to the surface. Tory council leaders have long been privately voicing their exasperation and that's putting it politely - with Local Government Secretary Eric Pickles and his handy hints and tips as to how they should be doing their jobs.

This centres on what they would see as his overly optimistic view of their ability to maintain essential public services in the face of dwindling finances. The government's drive for a country-wide Council Tax freeze next year has brought these tensions to the surface. Mr Pickles is offering councils a one-off payment - equivalent to a 2.5% rise in their Council Tax - if they agree to a freeze for the coming financial year.

Ministers, of course, have no power to enforce a freeze. Indeed there are few things they like talking about more than all the decision-making powers they are returning to local communities.

Balancing act. 

At the same time Mr Pickles - and his lieutenant Local Government Minister Bob Neill - are making it quite clear that in their opinion councils have a "moral duty" to take the money and freeze the Council Tax. Not to do so, they say, would be a "kick in the teeth for Council Taxpayers" and to "treat the local electorate with contempt".

So it's not a great time to be leading a Conservative council which takes the view that it can't balance the books without putting up Council Tax. South Hams District Council leader John Tucker is one of many council chiefs facing new challenges

Most Tory councils are toeing the line. But authorities like Surrey County Council and South Hams District Council in Devon are kicking back. Surrey is implementing a 2.99% increase. So councillors there clearly don't feel the government's 2.5 will even cover this year - let alone the longer term.

South Hams is putting Council Tax up by just 2.5%. On the face of it, this is more puzzling: wouldn't it be cleverer to accept the government's generous offer, give your electors a little Council Tax holiday and then put up Council Tax the following year if you really felt you had to? It's not that simple, though, for councils like South Hams or Surrey. They clearly see Council Tax as something which - like hot air - has an inexorable tendency to rise.

Accordingly, their financial planning is obviously based on at least a vague presumption of cumulative increases in the years to come. South Hams' 2.5% increase will roll over automatically into the council's base funding in the following year and the years after that.

Taking Uncle Eric's short term shilling would have thrown things into disarray because the money simply wouldn't be there to roll over into the next year. A council could, in theory, simply whack up the Council Tax the following year to fill the hole. This, though, would present a major headache in practice. Maintaining the funding level provided by the expired government grant would mean a 2.5% Council Tax rise just for starters.

Throw in the additional rise calculated for that year itself (let's say another 2.5% or so for the sake of argument) and the council would be in real trouble. Demanding an increase of 5% or more from taxpayers at one fell swoop would have run the risk of capping under Labour. Now, councils face an even more formidable obstacle: any increase above 3.5% would have to be subject to a local referendum. And the government has made it clear that threshold could change in future.

Eric Pickles reportedly told the Local Government Association's finance conference that refusing the Council Tax freeze money because it would not be part of the base funding in future years was a "ludicrous argument". Not because the proposition is untrue, but because the "whole idea" of the freeze is to get councils' financial bases down.

That would seem to leave those Tory councils with their hearts set on year on year tax increases in direct ideological conflict with their colleagues at Westminster. That's one of the points I put to South Hams District Council leader John Tucker this week in the film below.

We also touched on a general feature of the government's much-trumpeted localism agenda. On the one hand, ministers going out of their way to bang on about local authorities having the freedom to make the judgements they see fit.

But, on the other, making it emphatically clear what they think those decisions should be and publicly excoriating those councils who dare to use their freedom to disagree. 

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

ARE YOU PAYING TOO MUCH COUNCIL TAX- CHECK HERE? 

BARROW BOROUGH COUNCIL TAX HIKE ROW ERUPTS

First Published by: North West Evening Mail

A GOVERNMENT MINISTER HAS BLASTED LOCAL POLITICIANS FOR INCREASING COUNCIL TAX IN BARROW.

Members of Barrow Borough Council voted on Tuesday to increase Council Tax from April by 3.49 per cent. The administration said it needs to respond to government cuts on a long term basis, and the Council Tax freeze could not be guaranteed throughout the three year period, so tax has to be raised gradually to protect town hall services and keep job cuts to a minimum.

But over 300 authorities in England (around 80 per cent) have chosen to accept the Council Tax freeze. The move to increase Council Tax has been condemned by local government minister Bob Neill. Mr Neill said: “Every local resident will be dismayed by Barrow Borough Council’s decision to dodge a referendum by raising Council Tax next year to a hair’s breadth below the level that would give taxpayers a democratic vote.

“Turning down our £108,789 grant which allows Barrow-in-Furness to freeze Council Tax is enough of a kick in the teeth at a time when residents deserve a cost of living break. It’s a cynical move that is simply treating the local electorate with contempt. The council can expect voters to show their displeasure at the ballot box.” At Tuesday’s meeting Barrow Borough Council leader, Councillor Dave Pidduck said his group had chosen to reject the Council Tax freeze as they are preparing a long term strategy. He said: “We asked the officers of this council to prepare all the figures for us so we could weigh up what accepting the Council Tax freeze would mean.

“We asked what would it mean for the people of this borough and the council. They produced a set of neutral figures and then we took the decision.” All six Conservative members of the council voted against taking the freeze, and accused Labour of going against their pre-election promises. Councillor Ray Guselli said: “We simply must stop spending other people’s money and reduce local taxes. “This Labour council has even denied the public a proper say, by increasing Council Tax a ridiculous one hundredth of a per cent below the amount which triggers a referendum. “Perhaps they don’t want to hear what people say.”

Speaking after the meeting, Councillor Brendan Sweeney said the decision had been a tough one but was a result of the tough government cuts. He said: “It is not a fair choice. The problem we have got is that the government cutbacks are so big. “We are losing £12m, although have been given a transition grant of £4m but we have to spread this right through to 2015/16 because by then our government funding will be almost halved. “We are always conscious this is public money, but it is the public’s services that we have to provide and protect.” Leader of the opposition, Councillor Jack Richardson, said the refusal to take the grant proves the council is out of touch.

He said: “The national perspective is that we are out of sync. “Over 80 per cent of authorities are taking the grant. “They (Labour) had made their minds up that they were going to put up the rates and increase charges. The increased charge means they will bring in an extra £448,000 which is equivalent to a 10 per cent increase in the rates.”

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

ARE YOU PAYING TOO MUCH COUNCIL TAX- CHECK HERE? 

SAVING MONEY ON COUNCIL TAX

First Published by: Mortgage Guide UK.

WHEN THE GOVERNMENT INTRODUCED THE COUNCIL TAX IN 1991, THEY RUSHED TO GET HOUSES VALUED.

They outsourced the job to estate agents and other people. Usually, they would make valuations just be having a quick look at the outside of the house and making a best guess about what value it was in.

Since 1991, there has been no re-banding. The effect is that many houses are incorrectly banded leading to a significant number of people paying too much Council Tax.

The easiest way to check is ask local neighbours what band they are in. If they are in a lower band you have a very good chance of not just getting a lower Council Tax bill, but getting a backdated rebate. A friend of mine recently was successful in getting a lower Council Tax band.

Other tips for Saving Money on Council Tax:

• Students Don’t Pay council Tax
• If you live alone, you are entitled to get a 25% discount. Make sure you tell the council though.
• If there is one adult and several students, you are entitled to the 25% discount.
• Renovation. If the house is empty for renovation, you can claim an exemption for up to 12 months.

On a personal note, I really dislike the Council Tax; it is very regressive and takes a high % of my meagre teaching income. I would like to see a local income tax which would be fairer. The thing with the Council Tax is that it was rushed through because everyone despised the poll tax. But, the solution given was not the best.

Other Extreme Council Tax Savings:

Live in an area where council tax rates are low.

Live where council services are run on the basis of good value for tax payers money or where the government subsidy is high. ‘If you’re on a low income, whether you’re working or not, and need financial help to pay your Council Tax bill, you may be able to get Council Tax Benefit. 

Beware of the potential ‘mansion tax’ beloved of the Libdems but also keep an evil eye on Eric Pickles rhetoric or reality on Council Tax 

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

ARE YOU PAYING TOO MUCH COUNCIL TAX- CHECK HERE?

COUNCIL TAX - SAVING TIPS WE ALL NEED TO KNOW:

FIRST PUBLISHED BY: THE GUARDIAN

SAVING TIPS WE ALL NEED TO KNOW

Challenge your bill:

Don't be afraid to query your Council Tax bill. In 1991 properties were given "drive-by" valuations to assess which band they should be in: many ended up in the wrong band as a result, with home-owners paying hundreds of pounds more than necessary. 

But the internet means it's now possible to have a professional check done and challenge your band - this is worth doing as any repayment will be backdated.

To check what band your home is in, go to CT REBATE UK Limited. They will have to compare your house with similar houses in the neighbourhood. 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, which they will pursue for you.

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.

If your property is found to have been placed in the wrong band, you could be due a rebate for all the extra tax you have paid over the years - from the date you moved into the property or even back to 1993, when the system began.

Get a student in:

Households comprised entirely of students don't have to pay Council Tax at all, and if you have one student in your household you get 25% off.

Pay on time:

Council Tax is billed annually by your local authority. Most give you the choice of paying the whole bill upfront, in two half-yearly instalments or monthly either in person, at the bank, over the phone, on-line or by direct debit. But if you miss two monthly payments, you could lose your right to pay in instalments and will be sent a demand for the whole lot.

Find out if you are entitled to any exemptions:

Some properties are exempt from Council Tax, or qualify for a discount on their bill. For example, empty unfurnished properties can be exempt for up to six months, while properties that are uninhabitable or being renovated are exempt for up to a year.

Furnished second- or holiday- homes in England and Scotland will be liable for Council Tax, but will have a discount of between 10% and 50% because no one lives there on a permanent basis. Other properties that could be exempt from paying some or all of the Council Tax include homes that are unoccupied because the normal resident has had to go into care. 

Claim Council Tax benefit if you can:

If you earn less than £16,000 you may be eligible for Council Tax benefit: some people on low incomes can get a reduction of up to 100%. You can check if this applies to you by contacting your local council, but as a rule of thumb, if you're entitled to Income Support, income-based Jobseeker's Allowance or the guarantee credit of Pension Credit, you're likely to be eligible for help with your Council Tax.

Or a second adult rebate:

Council Tax is based on the assumption that two adults live in each property, so you might be eligible for a second adult rebate if your partner or person you live with is on a low income, is on Income Support or is claiming JobSeeker's Allowance. Other people who may be able to get money off their bill include disabled people, carers and the mentally ill.

How your bill is worked out:

Council Tax is billed per property and how much you pay depends on the band your property is in. Properties were last assessed for bands in 1991, with those worth under £40,000 at that time placed in band A and those worth over £320,000 in band H. The 1991 valuation is still used to determine a property's band.

Properties in band A have the smallest Council Tax bills (normally around £1,000 a year), while those in band H pay the most (anything up to about £3,000 a year). Your bill depends not only on which band your property falls into, but also on your council - each sets its own rates according to political as well as financial concerns.

Occupiers not owners are billed, so tenants rather than landlords pay in a rented property. Single occupiers get a 25% discount.

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

ARE YOU PAYING TOO MUCH COUNCIL TAX- CHECK HERE?