“Local authorities forced to cut council tax support sees surge in unpaid tax bills” (well, duh!)

“Around 90% of English councils have been forced cut council tax support for working age claimants, meaning many low-income households have fallen behind with their council tax bills, according to new research.

A report by the Institute for Fiscal Studies (IFS) has highlighted the impact of the government’s decision to abolish the centralised council tax support (CTS) for low-income households in 2013, which has seen an extra 1.3 million working-age households sent a council tax bill.

Nearly five million households received localised tax support in 2017-18, costing local authorities a total of £4.1bn – and 2.4 million working-age people received support, with an average benefit of £770 per year.
But the IFS has estimated that councils have failed to collect one-quarter of the extra council tax that low-income households have been billed as a result of the funding cuts.

This explosion of unpaid council tax is around 10 times higher than the 2.5% of council tax uncollected by local authorities under the old CTS system.

CTS schemes have also continued to become less generous since they have suffered funding cuts and were brought under local council control – and the report reveals that low-income households in poor parts of England are more likely to have been affected than those in affluent areas.

Director of welfare at the Nuffield Foundation, Mark Franks, said: “The fact that local authorities are unable to collect around one quarter of the additional council tax they have asked for indicates that support schemes are not working as effectively as they could.

“This important research should help in reviewing the design of council tax support schemes and the benchmarks they are based on.”

The report stated that giving people an entirely new bill is what seems so problematic with this type of tax collection.

Thomas Pope, one of the authors of the report and an IFS researcher, commented: “Many low-income households do not pay this new bill, almost regardless of its size. From their point of view, these changes have clearly increased problems with council tax arrears.

“From councils’ point of view, they are likely to receive significantly more council tax if they increase bills for those already paying some council tax than if they try to raise the same extra money from those who currently have no bill to pay.”

http://www.publicsectorexecutive.com/Public-Sector-News/local-authorities-forced-to-cut-council-tax-support-sees-surge-in-unpaid-tax-bills

Bankrupt Tory council gets special treatment and audit bill balloons

Owl wonders how it would have been treated if it had not been a Tory council …

Its audit bill has ballooned:

“In its final audit report released this week, auditor KPMG said delays have been caused by the slow and patchy provision of information by the council and departures of key staff at the authority.

The extra work caused by the delays would more than quadruple its original fee of £71,250, it said.

The report said: “We stated during the audit committee on 26 November 2018 that this had now risen, at that date, to approximately £300,000 in total (i.e. including original scale fee).”

http://www.room151.co.uk/funding/delays-cause-northampton-audit-bill-to-balloon/

and

It is being allowed to raise an extra 2% on council tax without the (legal) need to hold a referendum:

“The council had already proposed raising council tax by 2.99%, the maximum amount it could do before holding a local vote.

The final settlement stated: “For 2019-20, the relevant basic amount of council tax of Northamptonshire County Council is excessive if the authority’s relevant basic amount of council tax for 2019-20 is 5% or more than 5% greater than its relevant basic amount of council tax for 2018-19”. …

When classified as “excessive”, a local authority must hold a referendum on its proposed tax hike.

In November, in a bending of the rules by the government, Northamptonshire was given permission to use £70m of capital receipts to help balance its budget.

The final statement otherwise largely confirmed what was contained in the earlier provisional settlement in December, with core spending power rising by 2.8% in cash terms from £45.1bn in 2018-19 to £46.4bn in 2019-20.

In real terms this is almost a freeze.”

http://www.room151.co.uk/funding/northamptonshire-thrown-a-lifeline-again/

Council tax, stamp duty or a home value tax?

“COUNCIL tax and stamp duty should be scrapped and replaced by a new annual levy based on the value of people’s homes, a powerful think tank has said.

The radical plans put forward by the Institute for Public Policy Research (IPPR) would see households pay yearly property taxes based on the current market price of their home.

It argued the move would help reduce wealth inequality between those who own a home and those who don’t.

The think tank claimed housing is currently “undertaxed” relative to other assets, distorting investment behaviour and contributing to inequality between homeowners and renters.

A property tax rate of 0.5 per cent would mean an annual tax bill of £1,243 for the owner of an averagely priced UK home valued at £248,611, the IPPR said.

The think tank claimed if the new property tax was set at 0.5 per cent it would raise at least as much as current council taxes. …

Carys Roberts, senior economist at IPPR, said: “Council tax is a regressive tax as it falls disproportionately on those with lower incomes and wealth.

“It’s also outdated, as it’s based on valuations that have not been updated since 1992.

“A new new property tax would be far more progressive, and would effectively capture increases in house prices in a way the current system does not.”

Property owners have seen their wealth and income grow, while rising numbers are locked out of home ownership and must pay increasingly high rents, according to the IPPR.”

https://www.thesun.co.uk/news/7448976/property-tax-scrap-council-tax-stamp-duty/

“Somerset [Tories] blames ‘broken’ [Tory] funding system for major cuts”

Too little too late, councillors. You froze your council tax and submitted yourselves willingly (nay, enthusiastically) to austerity – now reap your “reward”. Or rather cause your voters to suffer for your blind adherence over these years to the party line.

“Youth services, learning disability support and reserves contributions will be hit under new plans approved by the council.

Savings of £13m over the remainder of this financial year and £15m in total in 2019-20 are expected to be made through the plans, ratified by the council last Monday.

The young carers service was the only area given a ‘stay of execution’ while the council discusses with the carers and the families where else they could get support, such as voluntary groups. This service could still be cut.

Council leader David Fothergill said: “This is not the biggest set of savings Somerset has faced. But it is absolutely the most difficult set of decisions we have had to consider.”

He added: “The government model for funding local authorities is broken.

“Rural councils like ours don’t get the funding they need or deserve.

“I have taken every opportunity to lobby and fight to address this, but there has been no extra funding. That is hugely disappointing.”

The council also wants to make savings in areas including winter gritting, park and ride services and funding to Citizens Advice Bureau services.

Fothergill said he would be writing to the secretary of state to ask for help before the next budget.

As reported by PF in July, the council ruled out issuing a Section 114 notice, as Northamptonshire council did earlier this year. It did say at the time it would have to make “urgent decisions” to address its financial position.

The council will be consulting on proposals for councillors and staff to take two days’ unpaid leave for the next two years. Unite union has criticised this idea, saying it was “a step too far”.

Elsewhere, Fife Council is faced with a £32m budget gap by 2022, according to a council report.

The Scottish council will have to make savings of 5% every year to plug gaps in its finances, the report put to the council’s policy and coordination committee said.

The council predicted its budget gap will rise from £9.4m in 2019-20 to £23.1m in 2020-21 and reach £32.1m in 2021-22.

The report said the biggest budget pressures faced by the council include children’s services and education (48%) and health and social care (17%).

The council has been contacted for comment.”

https://www.publicfinance.co.uk/news/2018/09/somerset-blames-broken-funding-system-major-cuts

“Council cuts are putting the vulnerable at risk, Tory peer says”

“LGA chief says austerity could damage local authorities ‘beyond recognition’

Local authorities have reached the point where relentless financial cutbacks are putting the wellbeing of vulnerable adults and children at risk, the Conservative leader of the Local Government Association (LGA) has warned.

The Tory peer Lord Porter said that after eight years of austerity during which £16bn has been stripped from municipal budgets in England, councils risked being “damaged beyond recognition” and communities depleted of vital services.

An £8bn black hole in council budgets would open up by 2023 unless ministers stepped in to close the gap between spiralling demand for adult and children’s social care services and shrinking town hall incomes, he said.

“We’ve reached a point where councils will no longer be able to support our residents as they expect, including our most vulnerable,” Porter added.

As well as problems coping with demand for services for elderly and disabled adults, the LGA says councils are struggling with an explosion in the number of children in care, and a rising bill for 80,000 homeless families placed in temporary housing.

An LGA briefing on the prospects for local government states: “The failure to properly fund these services puts the wellbeing of some of the most vulnerable residents at risk, and this cannot go on.”

Porter’s intervention, ahead of the LGA annual conference, which opens in Birmingham on Tuesday, reflects councils’ increasing concern about the precariousness of local authority finances, and frustration that ministers are ignoring the escalating crisis in social care.

While the NHS last month received a five-year £20bn cash injection, the government’s plans to overhaul the funding of adult social care services, originally due in a green paper before the summer, were delayed until the autumn. Council bosses have warned that in many areas these services are on the verge of collapse.

The fragility of many individual councils’ finances has increased speculation that more local authorities could follow Northamptonshire county council into bankruptcy. In May, Tory-controlled Somerset called for an overhaul of council funding after it was warned by auditors it could go bust.

Council leaders are also worried about the political consequences of having to sacrifice popular local services such as libraries, Sure Start centres, parks and leisure centres to divert funds into core services such as social care.

Bus services in ‘crisis’ as councils cut funding, campaigners warn
Porter said: “Councils now spend less on early intervention, support for the voluntary sector has been reduced, rural bus services have been scaled back, libraries have been closed and other services have also taken a hit. More and more councils are struggling to balance their books and others are considering whether they have the funding to even deliver their statutory requirements.

“If the government allows the funding gap facing councils and local services to reach almost £8bn by the middle of the next decade, then our councils and local services will be damaged beyond recognition.”

The LGA is calling for councils’ funding problems to be addressed through a government spending review expected in spring 2019, which is likely to set out public services funding plans over the four years to 2023.

A Ministry of Housing, Communities and Local Government spokesman said: “We recognise the pressures councils are facing, so we are working with local government to develop a funding system for the future. Over the next two years, we are providing councils with £90.7bn to help them meet the needs of their residents. On top of this, we are giving them the power to retain more of the income they get from business rates so they can use it to drive further growth in their area.”

Labour’s Andrew Gwynne, the shadow communities and local government secretary, said: “This new analysis is a damning verdict on eight years of Tory austerity. Our public services are straining at the seams, whilst the government continues to cut funding.”

https://www.theguardian.com/society/2018/jul/03/council-cuts-are-putting-the-vulnerable-at-risk-tory-peer-says

The Great Public Asset Sale!

No mention of community hospital sales – many hospitals having been financed by the local population.

And it begs the question: if the community has no assets and is getting only statutory services which are funded out of general taxation – what are we paying (increased) council taxes for?

“Libraries, swimming pools, youth and community centres, town halls, parks and other open spaces were among more than 4,000 public assets sold by local councils to developers and other private buyers last year.

Sales appear to have risen since George Osborne, who was then the chancellor, changed the rules in 2016 to allow local authorities to use money from sales of publicly owned buildings and land to cover running costs. Campaigners say that authorities facing financial pressures are denying future generations access to many community assets.

Locality, a network of community organisations, submitted freedom of information requests to all 353 local authorities in England asking about asset sales, of which 240 responded. The results showed that councils sold 4,131 buildings or plots of land last year.

Tony Armstrong, the chief executive of Locality, said: “One of the concerns we have is that many local authorities are just selling these assets off, and until now we have not had a clear picture of the scale of this.” He called for more buildings and sites that councils could no longer operate to be transferred to community groups that could run them on a not-for-profit basis.

Richard Watts, of the Local Government Association, said: “With local government facing an overall funding gap in excess of £5 billion a year by 2020, councils face difficult decisions about how best to use their resources to support local services, day-to-day activities and to protect public assets. Before a decision is made to sell an asset, the cost of selling it versus the benefit it could bring is considered carefully.”

Source:Times (pay wall)

The super-rich turn out to be mean – imagine that!

“Just 350 of the 15,600 wealthiest households in Westminster, one of the country’s richest boroughs, have answered the local authority’s call to voluntarily pay extra council tax to help tackle the homelessness crisis in the heart of London.

In February, the Westminster council leader, Nickie Aiken, wrote to all residents in the most expensive band H properties to ask them to consider paying an extra £833-a-year “community contribution” to help fund youth clubs, homelessness services and visits to lonely people.

But only 2% of the households have stepped forward to help their poorer neighbours, the Guardian can reveal. Those asked to consider making an extra contribution include the residents of the Candy brothers’ luxurious One Hyde Park apartment complex in Knightsbridge and those living in hundreds of multimillion-pound mansions in Mayfair, Belgravia and Maida Vale.

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Residents in Westminster pay the lowest council tax in the country, with band H payments of £832 a year plus another £588 to the Greater London Authority. In Poole, Dorset, the band H charge is £3,358.

While very few of Westminster’s wealthiest residents have answered the council’s plea for help in maintaining essential services, they are paying tens of thousands of pounds a year in service charges to maintain their luxury buildings. The service charge on a £6m one-bedroom apartment in One Hyde Park comes in at more than £22,000 a year. The most expensive flat in the development was sold to the Ukrainian billionaire Rinat Akhmetov for £135m in 2011.

Aiken said she introduced the voluntary contribution scheme following “a growing number of requests from some residents who live in the highest valued homes that they wanted to voluntarily contribute more than their existing council tax”.

The council said that in a pilot consultation more than 400 people responded positively to the survey saying they would support the scheme. But it appears that many may have failed to follow through on their initial enthusiasm. “The outcome of our consultation reflects the kind and generous spirit of Westminster residents,” Aiken said in February. “It also confirmed what I had heard from people I had met on the doorstep that those in the more expensive homes are willing to contribute more to community projects. The scheme is most popular among residents of the most expensive homes.”

However, four months down the line, Aiken said just 350 households had contributed a total of £342,000. The biggest single donation was £2,500. “This scheme had its cynics, but the number of contributions we have had are proof that an innovative idea like this one can make a difference,” she said. …”

https://www.theguardian.com/money/2018/may/13/westminster-wealthiest-households-failing-pay-extra-tax-community-contribution