The Great Council Tax Scam

As you might be aware, since the time of Prescott’s Minister for Local and Regional Government Nick Raynsford, the Government has made much of “keeping under control” the increase in Council Tax in local authorities up and down the country.

Indeed, the magical – and somewhat arbitrary – ‘capping’ figure of 5% has perplexed local government finance officers and cabinet members in trying to set their council tax. But for some years now, a scam has been perpetuated by some local authorities because of a loophole acknowledged yet ignored by the Labour Government.

Although County, District and Borough councils all have to ensure any rises in council tax stay below 5%, Town and Parish Councils do not. The scam then consists of some District and Borough councils simply “handing over” their responsibilities to their Town and District authorities, who then charge rate payers extra for this provision. Needless to say, the Borough or District Council keeps the amount it was originally given by its rate payers to provide the old service.

The Department for Transport, Local Government and the Regions (which used to be the Department for Environment, Transport and the Regions and is now the Department for Communities and Local Government) was aware of this as long ago as September 2000, as you’ll see from Anne J to its Green Paper for Town and Parish Councils – http://www.local.odpm.gov.uk/greenpap/annexj.htm. One of the key aspirations of this paper was “…to be fair to those who use and pay for local authority services” and “…to be intelligible and transparent to all stakeholders”.

However, in paragraph J15, the Government admits that “Parish precepts account for less than 1½ per cent of total council tax collected. For most households, the parish precept is a very small component of the council tax bill. However, there are a few towns and parishes where the parish precept is larger than the council tax due to the district council. In these cases, it is illogical that taxpayers should have protection via the Government’s reserve capping powers from excessive council tax increases made by the district, but no protection from excessive increases in the precept.”

And so it goes – a fascinating article by Mike Schofield of the IsItFair campaign tells the full story – http://conservativehome.blogs.com/localgovernment/2008/04/mike-schofield.html#more.

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