Newsletter 28 – April 2010
Let’s get this
wretched system changed
First point - Grants. Isitfair’s statistics expert calculates that
the Government funds around 51% of Local Authority spending (excluding Education, see note). But it is important to recognise that this
figure is the “average”, and that some have to fund a much greater proportion
of Local Authority spending through Council Tax than do others. In other words, the grant distribution is very
wrong. Over the years the grant for many
councils especially the Shires (and indeed some Unitaries) has shrunk to very
meagre levels. My council receives one
of the lowest grants in the country, and after the direct grant is handed over
to schools, the Government provides only 22% of the money needed for other
services; the rest has to come from Council Tax. If this County Council received the same
Government grant as some other councils, we would not need to pay any council
tax whatsoever. In fact, it is rumoured
we might even get a dividend!! Other
Shire counties are in much the same boat as mine, and many have their fair
share of poverty stricken areas. Everyone
who lives in a Shire county is not rich!
Of course we are aware that there are areas of the country which, for
one reason or another, need extra help, of course there are and of course they
should receive it, but this policy on grants appears to have lost sight of all
reason.
Note: The Government says that they
fund councils to the tune of 75%, BUT this figure is very misleading since it
treats Education spending as Local Authority spending. In reality, Local
Authorities do little more than manage Education expenditure as agents of
Central Government. It cannot be diverted to other uses. It would therefore
seem to be more appropriate to exclude educational spending from these
calculations, and indeed that is what happens in many of the pages of figures
put out by government which allow a better comparison of grants over the
country.
Second point:
The council tax bands are here because of
the flawed banding system installed in 1992. If this Government had any intention to change
the system, they have had nearly 13 years to do so. Of course they will not change it, it suits
them very well. Voters in their heartlands
are paying hundreds of pounds less council tax than others - and often enjoy
more in the way of services. My little two
bedroom house falls into band E, move it into a Labour heartland and it will
probably fall into a band B. I am a
pensioner. I draw the same state pension
as any other pensioner across the country. My husband receives an army pension. I reckon that those two pensions put us in the
same league as many other pensioners - but over £1,700 is taken from us in
council tax. Financially we are worse
off just because we happen to live in an area of the country that does not vote
for this Government.
The
Conservatives may well have introduced this infamous tax, but this Government
has exploited it and will continue to do so.
These points need to be addressed. There is an election just around the corner. The political parties must be made to admit
that the system needs an urgent overhaul.
We must all take every opportunity whether it
is on our doorsteps when confronting a candidate, or at party political meetings
or anywhere else, to draw attention to the flaws in the council tax system. The lack of participation at recent House of
Commons debates on local government finance does not give us confidence that
our current politicians – with a few notable exceptions - attach much
importance to the subject.
They want our vote. Let’s make them listen.
Let’s give them stick!!
Personal impact of Council Tax (from a long term supporter of
Isitfair)
The impact of
council tax varies from individual to individual. The rich don’t care and those totally
dependent on the state don’t pay. The
group that has been hardest hit are those on modest incomes, well below the
average, who have prudently saved (perhaps foolishly) and now find themselves
squeezed dry by unfair, out-of-control council tax (and forced to use their
savings to ‘get by’).
There are
stories of those who thought they had made provision for a modest retirement
only to find their plans undermined by council tax demands which have risen
three times faster than inflation. These
people pay their way, their bills and their taxes, but have little left over
for the small pleasures of life, such as eating out. They are angry at MPs who abuse the expenses
system. No wonder, they think, that MPs
are dismissive of the council tax unfairness. Such MPs are totally disconnected from the
realities affecting ordinary people.
The coming
election is a chance to get rid of uncaring MPs. Make sure your needs are known and vote
accordingly.
What could happen to Council Tax after the General Election
Labour
Labour is
wedded to CT. If they get back in again it
is probable - indeed highly likely - that there will be a property revaluation.
This could be disastrous for CT payers. Rather than push up general taxation, they
will dump as much as possible onto local government and let them take the blame
for the rise in CT.
The
revaluation in Wales was trumpeted as being "revenue-neutral" i.e.
the revaluation would not result in any more, or any less, CT being collected:
it would just be a redistribution to make the whole thing "fairer". What they said was that 25% of CT payers would
see an increase, 25% would see a decrease and 50% would be unaffected. What
actually happened was that the revaluation ALONE resulted in 9% more CT being
demanded. Only 8% of CT payers ended up
paying less, but 32% ended up having to pay more. Some had to pay a LOT more, which is why they
also had to bring in a "transitional relief" scheme whereby people
who were bumped up several bands were bumped up one CT band per year until they
ended up in what was considered to be the correct band. If the same revaluation exercise here in
England goes the way the revaluation went in Wales (and bearing in mind this
government has a record of not learning from past mistakes) the majority of us
would end up out of pocket (based on our own research). Would they also
introduce a "transitional relief" scheme?
Conservative
The
Conservatives also are still wedded to CT. After all, they introduced this system so it
could be politically difficult for them to make any significant changes. They have said that if they end up with a
majority and form the next government, any increase in CT - provided it is not
more than 2.5% - will be reimbursed from general taxation for two years -
meaning that CT payers will not see an increase in their bills for two years. They are selling this as a CT freeze for two
years (which it really isn't) but - what happens in the third year? Will we see an increase in CT of 5% (actually
5.0625% compounded) - plus whatever the councils think they can get away with
in year three? Furthermore - unless we have
missed it - the Conservatives have said nothing about how the 2.5% will be calculated,
but we understand that this "freeze deal" will apply to each
individual precept (County Council, District Council, Police and Fire
Authorities). The Conservatives have
also said they would not go ahead with a property revaluation for council tax
purposes - but that they would do away with the existing capping regime. They are in favour of the greater use of local
referendums to help guide decisions. Most importantly, they claim they will make
the local government funding settlement more transparent. Caroline Spelman has outlined more Conservative
policy in her submission (see page 3).
Liberal Democrat
The Lib Dems’
current policy is to scrap Council Tax in favour of Local Income Tax, and to
localise business rates and put them on a site value rating basis. They would also introduce a “mansion tax” on
homes with a value of over £2 million. As
far as we have been able to ascertain, they have not disowned their earlier
policy papers which were firmly in favour – in the long term - of a land value
tax on both business and domestic properties, but please see further information
on this in the note on page 5.
Even though they have less chance of becoming
the party of government, they may have some influence if there is a hung
Parliament and if they cosy up to one or other of the two main parties in some
cobbled-together coalition.
Fringe
Parties
The fringe
parties (Greens, UKIP and others - even the BNP) - could have an influence on
the make up of the next parliament if it is close run thing between Labour and
Conservative.
Town and Parish councils precepts
None of the
parties has mentioned anything about correcting the anomaly that allows town
and parish councils to increase their share of the council tax bill (their precept)
by more than the cap that applies to other, higher authorities. Being well aware that the cap does not apply
to town and parish councils, a growing number of higher-level councils
(County/District/Borough/City) are starting to off-load some of their
non-statutory duties onto town and parish councils in their area – but keeping
the money that they would have had to spend on these duties. This
off-loading
has meant that many town and parish council precepts have rocketed such that,
in a growing number of cases, the amount demanded by the town/parish is as much
as, or even more than, the amount demanded by the
district/borough
council.
In a Green
Paper way back in 2000, and in another document issued by the Department for
Communities and Local Government in 2002, the current government has admitted
that this off-loading can also lead to double taxation, in that householders
can be charged twice for the same services. Even though the current government have been
aware of this possible double-taxation business for 10 years, and have issued
Green Papers and other reports about it, neither they, nor any of the other
parties, has said anything about putting a stop to it.
Late news: Government figures released on 24 March reveal
that the average Band D council tax set by local authorities in England for
2010-11 will be £1,439 compared with £1,414 in 2009-10. This equates to an
average increase between 2009-10 and 2010-11 of 1.8%. The report goes on to say that parish precepts
will rise by an average of 4.8%. Note –
average! We have heard of a number of parish
precepts rising by over 10% and a few by substantially more (well over 50% in
some cases).
We asked for their thoughts
Some time ago
we asked the three main parties if they would write something for us on Council
Tax and Local Government. We received
replies from both the Conservatives and the Liberal Democrats; the Government
did not even give us the common courtesy of replying to our request. We are very pleased to publish the thoughts of
the other two main parties and hope these articles will give you some insight into
their thinking.
Conservatives
Caroline
Spelman MP, Shadow Secretary of State for Communities and Local Government,
writes for Isitfair on Conservative plans to help bring down council tax
levels:
“Isitfair
members, along with so many others, are fed up to the back teeth of council tax
being forced up to levels which are unmanageable for lots of households,
particularly those on fixed incomes such as pensioners.
“The
Conservatives are very clear about the changes we need to make so that we can
bring council tax back down to manageable levels.
“We will
freeze council tax for two years, in partnership with local councils. The example of Scotland shows how a council
tax freeze can work. The cost of extra central
support to deliver this will be met by cutting wasteful central government spending,
for example, such as on advertising and consultants.
“We will give
local residents the power to veto high council tax rises, by requiring any
excessive rise by a council (or a precepting authority) to be voted on via local
referendum.
“We will also
end the practice of central bureaucracy and cost burdens being imposed on
councils by central government without adequate funding.
“The culture
of making announcements in Whitehall with council tax payers being left to pick
up the bill is one of the reasons we have seen average annual rises of over 6%,
way above inflation.
“We will
therefore implement the recommendations of the taskforce which was set up to
lift these cost burdens off local government and we will re-start its work to make
sure that Government departments do not repeat the mistakes of the past.
“Another way
to reduce the upward pressure on council tax is to give councils greater
flexibility over how they spend money, so that it reflects the needs and priorities
of local communities rather than ticking the boxes of a one-size-fits-all inspection
regime.
“We will
abolish the Comprehensive Area Assessment inspection regime which distorts the
priorities of local councils and forms part of an inspection industry which the
National Audit Office estimates to cost councils £2billion a year.
“We will also
give you bold new powers to scrutinise and challenge the way council tax is
being spent so that your money is spent as efficiently as possible in conjunction
with other public money being spent locally.
We will require councils to publish online all expenditure over £500,
this system already operate in London where Mayor Boris Johnson has insisted
the Greater London Authority publish all spending over £1000. This principle should apply to the pay deals
for senior town hall staff as well, so we will require local authorities to
publish information about the salaries of senior town hall staff including pensions,
benefits and severance packages.
“To help councils
meet the demands of providing services for a growing population, we will match
fund the additional council tax raised by each council for each new house built
for a period of six years after that house is built. In simple terms this will mean that councils
will get an automatic six-year, 100% increase in the amount of revenue derived
from each new house built in their area.
“In a similar
way we will introduce a new Business Increase Bonus whereby councils will be
able to keep the additional business rate revenue that arises from increased
business activity in their area for the following six years.
“These are
all clear, costed and workable measures which will help bring council tax
down. Since 1997 council tax has doubled
whilst frontline services like bin collections have been cut. We can’t carry on like this.
“At this
election it’s a straight choice between our measures for reducing council tax,
or Gordon Brown’s plans for increasing it even further through an expensive and
unnecessary revaluation. When a revaluation
was forced on Wales three times as many homes went up a band as went down.
“We will
scrap Gordon Brown’s plans for a council tax revaluation and higher council tax
bands in England and we will abolish council tax inspectors’ rights of entry
into people’s homes.”
Note: Members have expressed concern that the cost
of any referendum would eventually have to be borne by the council tax payer.
Liberal Democrats
From the
office of Julia Goldsworthy, Shadow Secretary of State for Communities &
Local Government:
“Council tax
is the most unpopular, unfair tax in Britain today. That's why the Liberal Democrats are committed
to scrapping it, as part of a wider reform of local government finance.
“The council
tax needs to be scrapped, because it is a deeply regressive tax that leaves the
poorest households paying almost 3 times more of their income than the richest.
It needs to be scrapped because the council
tax benefit system has such poor levels of take-up, meaning millions entitled
to support do not claim it. And it needs
to be scrapped because annual above inflation increases are the norm, making
the tax increasingly unaffordable for those on low and fixed incomes.
“Councils are
doing their best with this unfair taxation system, but the existing system of
local government finance will be tested to breaking point in the years ahead,
as spending cuts kick in. Central
government grants are likely to be cut back, placing even greater pressures
only local authorities. It is more than
likely that many council taxpayers will see services being cut while council
tax bills spiral ever higher in the years ahead.
“This is why
we urgently need an alternative to the current system.
“As part of a
wider reform of local government finance, the Liberal Democrats want to replace
council tax with a fairer system of local income tax, based on ability to pay. A local income tax would be run through the
existing HMRC income tax mechanism, saving hundreds of millions of pounds by
abolishing the hugely bureaucratic and inefficient council tax collection
administration.
“Starting in
the second year of a Parliament, we would invite interested councils to come
forward to take part in pilots, before looking to roll out the scheme more widely.
“Under a system
of local income tax we would continue to give the £3 billion councils currently
get in council tax benefit, but provide it as a grant instead. Local authorities would be free to set their
own rates, reflecting their spending priorities. Central government grants would continue to
local authorities, as part of an equalisation process, but unlike the current
set-up, they would better reflect the needs of the area and the income tax base
of the authority.
“Britain has
one of the most centralised taxation systems in the world, with around 95% of
taxation raised by central government. By contrast local government only raises about
a quarter of the money it spends from the area it serves.
“The current
set-up imposes ring-fencing and gearing that makes it impossible for councils
to focus on their own priorities. Local government should be raising a far larger
proportion of what it spends. Reversing the current gearing system could be started
by localising business rates, which could be implemented more quickly than
introducing local income tax. Not only
would this help create more flexibility in the funding system, but it would
also ensure that people can see a clear link between the taxes they pay
locally, and the services they receive in return.”
Note: This Newsletter has been delayed whilst we
sought clarification from the Liberal Democrats on their previously stated policy
on Land Value Taxation. The situation,
as stated earlier, is that we have so far received nothing from them which
totally satisfies us that this policy has been abandoned altogether. They have not confirmed that their Policy
Papers 75 and 81 are now defunct. This
is what they said in an email dated 8 March 2010: “Our current policy is to
scrap Council Tax in favour of Local Income Tax, and to localise business rates
and put them on a site value rating basis. The LVT point is not being taken
forward into the General Election.”
Allowances/Expenses
Recent
revelations in the national press have made us aware of just how hungry for
money and power our MPs are, and, although in my opinion not stringent enough,
some effort has been put into righting the situation. Their attention now must be focused on local
government and the amount of money being extracted via councillors’ allowances
and expenses. Have you any idea just how
much your local councillors take out of the pot each year? We thought we had –
but each time we look into this, another and another allowance appears. Trying to find out the exact figures is just
like finding your way through labyrinth. We are told that the Regional Assemblies have
gone, but how many quangoes have replaced them?
How many fresh allowances have come to light? The Local Government Association’s website
reveals a maze of committees and boards, many of which provide a little more
money in the councillors’ pockets. Last
year, a survey of nine counties in the South and West of the country showed
that councillors (in County, District and Unitary councils) were costing us
nearly £39 million pounds in allowances and expenses. That is just the councils; we have not
attempted to include payments to councillors from, for example, Police and Fire
Authorities, or regional development boards.
So do we have too many councillors? Are they truly open about all the allowances
received? They will say that they are. You can go to your town or county hall and
look at the records. All councils are
obliged to publish details annually of how much they pay to each councillor,
but of course this does not include information about their councillors’
appointments on other councils and public bodies. We believe that all councillors should be
required to list all these appointments, allowances and expenses, altogether,
in one easily accessible place. Bravely
one or two councils have put them on the web – but even then they only tell you
which committees but not what remuneration is paid.
Court Cases
As you will
know, Cyril Martin has been involved in a dispute with the Valuation Office
regarding the banding of his home. His
MP Oliver Letwin became involved and eventually the Valuation office agreed to
visit his address. Cyril has since heard
that they insist on leaving his house in Band D. He tells me that he will continue to push for
his house to be put into a lower band.
Taking the rise out of Council Tax by Chris Wheal of Daily Finance on 23 Jan 2010
(Chris Wheal
has kindly given Isitfair permission to reproduce this article. If you want to use it or any part of it, you
must give credit to Chris Wheal and Daily Finance.)
Councillors
are meeting in the next few weeks to finalise how much our Council Tax bills
will be for the coming year. Make no
mistake they will rise. The Chancellor
buried in his pre-budget report his intention to raise an extra £1bn from council
tax next year.
Bigger bills
will help make council tax appear a more efficient tax. But really it is a horrendously expensive tax
to collect. Ten years ago, when I last
asked for the info, it cost £309m to collect £10.9bn in council tax in England
alone. It also cost £216m to pay out
£1.9bn in benefits. The latest
comparable figures are £339m to collect £20.9bn in council tax and £268m to pay
out £4.2bn in council tax benefits. To read more, see
http://www.dailyfinance.co.uk/2010/01/23/taking-the-rise-out-of-council-tax/
And Lastly…
Well, by the
time the next newsletter is published, we may well have a change in Government. Although the time is drawing close to a
General Election, none of the parties are really grasping the nettle and announcing
much on the future of council tax. As
one member of Isitfair said “The party which promises to get rid of this tax in
the first session of the new Parliament will get my vote”. I don’t trust any of them to keep that sort
of promise. Remember what this
Government said? “Within the first term
in office we will restore the link between pensions and earnings”. They lied.
We had hoped
to bring you something from the Mayor of Doncaster, but due to pressure of work
and press coverage, he has been unable to complete his article. We hope to have something in our next
newsletter.
Yours in the
cause
Christine
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