ROOF Blog

Council taxes will rise in the next financial year by 1.8%, the lowest figure since the levy was introduced nearly two decades ago. John Denham, communities secretary, claimed that the slightly below-inflation rise had been made possible by a 4% increase in central funding for councils from next month. But he acknowledged that there would be growing pressures on town hall budgets in the coming months against the wider backdrop of the UK’s large deficit. ‘Local people will rightly be intolerant of any council if they are told that care, libraries or youth services will be cut because they have not followed our radical reforms to protect the frontline services, which matter most to people,’ he said. The increase, the most modest since the tax was introduced in 1993-94, brings the bill for an average band D property to £1,439, from £1,414 this year.

The average cost of Band D council tax bills in England for 2010/11 is set to increase by the lowest percentage since the tax was introduced in 1993. The Chartered Institute of Public Finance and Accountancy (CIPFA) and local authorities predict rises of below 2%. A CIPFA survey suggests the average bill will be about £1,438.72.  CIPFA head of policy Ian Carruthers said although politicians had listened to calls to ‘avoid large increases’, financial pressures meant councils might still have to cut certain services.

Windsor and Maidenhead council will announce today a four per cent cut in the charge from April. This will bring the average council tax for a band D property to £996 2010/11, down by £41 from 2009/10. The Local Government Association said that Windsor and Maidenhead’s tax cut was the biggest ever. Most councils are set to increase the charge by between 2.5 per cent and 3 per cent from April. The RPI measure of inflation is currently 2.4 per cent. The local authority has cut more than £1million off the local authority’s budget between 2009/10 and 2010/11 - and handed the saving directly onto council tax payers. Windsor and Maidenhead councillors said they were hoping that the radical overhaul of its finances could form a blueprint for other councils across the UK to cut council tax. David Burbage, the council’s leader, said: ‘We are showing that council tax can go down as well as up. For too long council tax bills have inexorably risen, and there is no correlation between high council tax and good services.’

Borrowers with tracker or variable rate mortgages have benefited from a 17 per cent fall in the cost of owning a home in the past year. However, everyone else including tenants and those on fixed rate deals, have faced an increase of 4.5 per cent in the cost of household expenses. Energy costs rose by 13 per cent, water by 5 per cent, council tax and domestic rates by 3 per cent and the cost of repair work by 5 per cent, but for borrowers whose mortgage repayments have fallen these increases have not be enough to offset the 47 per cent they saved on interest repayments, the average mortgage rate falling to 3.62 per cent in April this year, from 5.8 per cent at the same time last year.

Since the Labour government came to power in 1997 more than 100,000 properties have moved into a higher council tax band because of home improvements. Critics are arguing that the addition of porches, bedrooms, conservatories, parking spaces and treehouses have cost owners on average an extra £200 a year, including more than 27,000 properties mostly in the South East, being bumped up a band in the past two years. The government has said it would re-evaluate council tax after the next election.

Hundreds of thousands of households have been overcharged in a ‘council tax cover up’ according to the Telegraph. According to leaked minutes, the Treasury has known since at least 2005 that many homes were in the wrong tax bands and that tens of millions of pounds may have been overpaid, but the government kept the details secret to avoid having to pay tax refunds.

The New Local Government Network (NLGN) has released a report arguing that a dramatic cut in public services could be avoided if local authorities were given new investment powers. The NLGN says this would allow them to retain staff, facilities and programmes; and even offer targeted cuts in council tax.

The Department for Work and Pensions (DWP) is writing to 200,000 pensioners who receive pension credit to encourage them to contact their local council to check if they are entitled to help with the council tax or housing costs. Pensions minister Rosie Winterton said the government wanted everyone to receive the help they are entitled to, and some people on pension credit may not be aware that they can also receive help with their rent and council tax.

Research from uSwitch.com has found that the recession is hitting towns across the UK with growing unemployment, falling property prices, and rising council tax. Swindon in Wiltshire has been the hardest hit as unemployment soars 197 per cent while house prices fell 16 per cent and the number of people collecting jobseeker’s allowance rose from just under 2,000 to more than 5,700 in two years. Brent in west London was the most ‘recession-proof’ area, with a 12 per cent increase in earnings, and below-average increase in jobseeker’s allowance claims.

The saga of MPs’ expenses rolls on – Scotland’s first minister Alex Salmond says that Westminster should use the Scottish parliament allowance scheme as a model to reform the system in the Commons. In Scotland members’ expenses are published every three months and the practice where some MSPs can claim interest on mortgages for second homes is being brought to an end. Meanwhile, Nick Clegg, Lib-Dem leader, has offered his suggestion – replacing the allowance with expenses for basic utility bills, council tax, and either rent of mortgage interest, with MPs prevented from making financial gains from any part of a mortgage paid for by the taxpayer. Gordon Brown has dismissed suggestions that dropping one of the key proposals for reform – replacing the second home allowance for a flat payment had been damaging.