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Mike Schofield: The Council Tax precept scam

Mike Schofield of the Is It Fair? campaign examines council tax hikes and their causes.

Have you ever looked closely at your Council Tax (CT) demand to see who gets your money; what proportion they get, and what percentage increases have been added to the different elements since last year?

In what are known as two-tier Local Government areas, your CT will be shared out, in varying amounts, between the County Council; the District or Borough Council; the Police Authority; the Fire & Rescue Authority, and – if you have one – your Town or Parish Council. In Local Government jargon, the amount paid to each of these bodies is known as a precept.

Where_money_graph_3Figure 1 (click to enlarge) shows a typical example of how the money is divided up in most places in the country.

[Note: If you live in an area with a single tier of local government, i.e. a Unitary or a Metropolitan Authority, or if you live in London, fewer bodies share the money. And, in a few places, the Fire Service charge is included in the County charge. Also - with a few exceptions - there are usually no Town or Parish Councils in single tier areas.]

Each body sets its own precept every year and the total of all the precepts determines how much your total CT bill will be. 

The District/Borough Council is responsible for collecting all the tax and then distributing it to the others.

Because there have been some horrendous increases in CT in recent years, and in an attempt to limit the increases in the individual precepts, the Government now specifies a maximum percentage increase that can be applied. This is known as a cap. Currently (2008), the cap is 5% and applies to the precepts demanded by each body – with the exception of Town and Parish Councils!

This means that Town and Parish Councils can increase their precept by whatever percentage they wish.

Being well aware that the cap does not apply to Towns and Parishes, a growing number of District Councils are offloading some of their non-statutory duties onto Towns and Parishes in their area – but keeping the money that they would have had to spend on these duties.

This has resulted in many Town and Parish precepts rocketing and, in a growing number of cases, now being as much or even more than the precepts demanded by the District or Borough council.

In a growing number of places, these uncapped increases add, considerably, to the total increase in the CT bill and push the total increase to over the 5% limit – to 6%, 7% or even more.

The Government has been aware of this state of affairs for years and even documented it in a Green Paper issued in 2000 where, in section J15 is stated:

“…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 [parish] precept.”

The problem was also recognised in a Department for Communities and Local Government (DCLG) document issued in March 2007 where is stated:

“Parish precepts in 2007-08 will total £299 million. This represents an increase of 6.7% over the 2006-07 figure of £280 million.”

District_parish_graphThe chart on the right shows just one example of how the Parish precept for one village in Hampshire has increased over the years.

Successive Government Ministers have done nothing to correct this non-capping anomaly. Indeed, when Phil Woolas was the Local Government Minister, the Isitfair council tax protest group asked him about this, and he responded by stating that the Government had no plans to cap Town or Parish precepts.

And so it has been. Nothing has changed since Woolas made that statement and, through its inaction, the govt. has continued, tacitly, to support this underhand way of getting around the 5% cap. 

The result? More and more non-statutory functions (but not the funds to finance them) are being off-loaded onto Towns and Parishes. Towns/Parishes can’t be forced to take on these extra responsibilities but some do – possibly unaware of the financial implications. Either way, it seems that many of the Districts keep the cash that they had previously been spending on the transferred functions; still increase their precept by just under the 5% cap, and the Town/Parish (i.e. the Town/Parish residents) pay again for the cost of the transferred services through huge increases in their local precepts. 

This is double-taxation, as admitted by the Government - in J18 of this Green Paper and in a DCLG document dated May 2002:

The BBC picked up the non-capping issue on the Politics Show from the West of England as long ago as April 2004 and, even though they presented it in their usual Government-friendly manner, they did include a quote from Charles Vernon, the Mayor of Malmesbury, who said:

"The strange thing about local government finances is that every parish can raise a precept which is not capped."

St Annes, Kirkham and Lytham, in the Fylde Borough Council area, face hikes of between 16 and 21 per cent in their Town/Parish precepts – while Fylde will still be increasing its share of the CT for 2008-09 by 4.99% - conveniently just under the Government 5% cap. Fylde Council leader, John Coombes, has admitted that the plans are a new method of charging taxpayers more but without breaching the Government's five per cent capping rate. Councillor Liz Oades, leader of the opposition, said:

"The town and parish councils will now be charging for parks and cleaning the streets, but unless Fylde lower their rates people are going to be paying for the same services twice."

See the Blackpool Gazette and an updated article here.

In Bromyard Parish, in Herefordshire, there are plans to increase the parish precept by 63% to repay, over the next 48 years, the initial cost of acquisition plus interest to buy what is described as:

“a clapped out Grade II building from Herefordshire County Council for some £590,000.00, which increases to £614,150.00 when you add the cost of legal fees and disbursements.”

This hike in the Parish precept, alone, will add £50 to the average CT bill in the coming year - before including proposed rises from Herefordshire Council; the Police Authority, and the Fire & Rescue Authority.

See the Hereford Times here, here and here.

There are other possible ramifications from these activities. While it is certainly the case that many Town/Parish councils currently decline to pay themselves allowances (as allowed by existing legislation) - as they take on an increasing number of functions and responsibilities, many Town and Parish councils are now considering taking up this option –– in a move that will push CT bills even higher!

That said, a significant number already do pay allowances. In the majority of cases, the current amounts may be small compared to the allowances paid to members of other authorities, but this is the thin end of a potentially large wedge.

For example – for 2008/9 - the members of Wootton and East Hunsbury Parish Council in Northamptonshire were proposing to award themselves a 500% increase in their allowances, to be funded by a 16% increase in the Parish precept and which – if adopted - would mean each Parish Councillor could collect a £4,000 allowance.

It was only after local people protested and said they wanted the village “de-parished” that the Parish council did a U-turn and agreed to pay themselves £750 each – as had been recommended by an independent panel. The increase in the Parish precept was pegged back to 3.14%.

If the items are still available on the web, see the Northampton Chronicle here, here and here.

And – amongst other startling statistics – of the thousands of complaints lodged with the Standards Board for England in the year ending 31 January 2008 about possible mis-deeds by members of Local Authorities, more than 50% have been about Town and Parish Councils.

See the Standard Board's statistics here and, covering slightly different periods, here, for a quietly released government announcement on February 15th 2008. The law has been changed so that new Town and Parish councils can be set up without seeking prior Government approval, which has, up until now, been a requirement. It makes you wonder why – does it not?

So - the floodgates have been well and truly opened. There will be thousands more Councillors; £millions more in allowances and expenses, and the possible additional burden of their pensions because they can all choose to join the gold-plated; index-linked; taxpayer-funded, final-salary Local Government Pension Scheme.

Are you ready to be ripped off?


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