The truth about local tax hikes

Again, I am not an accountant or a lawyer.

Here's an excerpt from the previous article. Powys County Council Accounts 2013-14:

The amounts of these reserves are set out on page 22.

Available reserves: £55,957,000

Unusable reserves: £246.26 million

Total reserves: £302,217,000

On page 16 of that document, under the heading “Budget Summary”, projected income from council tax is listed as £60,353,000.

The Budget is decided by Parliament every year and, as mentioned above, is the only report distributed to Council Tax payers each year. Articles provided to the press also refer only to the Budget.

That year, Powys Council Problems expected at the “budget” meeting:

Tickets for Powys County Council's budget meeting at Llandrindod Wells County Hall tomorrow will be on sale on the day on a first-come, first-served basis. Around 30 seats will be available in the chamber, with a further 77 in an overflow room, and proceedings will be broadcast live.

Protesters are expected to descend on County Hall in large numbers for a rally after proposals to cut education spending and Citizens Advice Bureau funding sparked anger across Mid Wales.

The council's savings plan is due to be approved at a meeting tomorrow, which will also see the council tax rate set.

Councillor Barry Thomas, leader of Powys County Council, said: “This year's budget is one of the council's toughest ever, with significant cuts to funding and ever-increasing pressures on services requiring £20 million in spending cuts…”

The lack of mention of the total reserves of £302,217,000 seems suspicious to say the least. The Powys Accounts do not define what “unusable reserves” are, but documents from nearby Rhondda state: Spilling Secrets (Theirs is £103,080,000.)

Unusable reserves

These are reserves established as a result of various regulations to ensure that the costs levied on council tax are appropriate. They do not represent the resources available for general council use…

Therefore, “unavailable funds” are determined by regulation. Many of Parliament's obligations are determined by Acts of Parliament. Acts cannot be repealed by regulations. Generally, all laws are Need to act under the Interpretation Act 1978:

Judicial Notice.

Every law is a public law that must be judicially recognized as such unless the law expressly provides to the contrary…

I said “in general.” Article 21 of the Local Government Act 2003:

(1) The Secretary of State may, by regulations, prescribe provision regarding the accounting practices to be followed by local governments and, in particular, with regard to the accounting of expenditures in revenue accounts.

(2) For the purposes of any law to which this section applies, good local government accounting practice means the following accounting practices:

(a) which the Authority is required to comply with by law; or

(b) contained in a code of practice or other document specified for the purposes of this provision by regulations made by the Secretary of State.

(3) Where there is a conflict between a practice falling within subsection (2)(a) and a practice falling within subsection (b), only the practice falling within subsection (a) shall be deemed to be the appropriate practice.

(4) Paragraphs 2 and 3 apply to the laws and regulations contained in the following Acts:

(a) this Act;

(b) any law enacted after this Act or during the same session as this Act;

(c) Local Government Housing Act 1989 (Chapter 42)

(d) the Audit Commissions Act 1998 (Chapter 18); and

(e) subordinate legislation (within the meaning of the Interpretation Act 1978 (Cap. 30)) whenever enacted…

In other words, here Richardson's paper:

And after thorough research, we were shocked to find that this international financial accounting structure was already in place right before our eyes…

What should be done? I believe that local perpetrators must pay a political and legal price.

In Powys, and possibly elsewhere too, the council’s elected leaders appear to have concealed the truth by failing to mention in their public budget statements a conscious decision not to use some of the reserves to make up the shortfall.

The fact that Powys council has over £300 million in reserves yet is passing on the hardship of a £20 million cut to its residents will not please many taxpayers. They may even be asking why it was necessary to collect £60 million in council tax. What are the “reserves” for?

If leaders are not also complying with their statutory obligation to provide services, they will likely face legal challenges.

Firstly, there is no legal basis for such council tax claims. They amount to “fraud by false representation”. Section 3 of the Fraud Act 2006:

Fraud by misrepresentation

(1) A person commits an offence under this provision if he or she:

(a) makes a fraudulent misrepresentation;

(b) by making that representation:

(i) To obtain a benefit for oneself or any other person; or

(ii) causing loss to or exposing others to risk of loss;

(2) A representation is false because:

(a) it is untrue or misleading;

(b) the person who made it knows that it is or may be untrue or misleading…

Note that “fraud” must be proven and that the tests include “untrue or misleading.”

In other words, if an official misleads a council leader about the council's statutory duties, the council leader risks criminal prosecution.

You might be thinking: “They wouldn't do that”. I've been researching Powys, but officials from nearby Rhondda Canon Taf Council did and were held to account earlier this year. Swansea Court of Queen's Bench:

Queen by application of Angharad Morris Donna Thomas

This is the fifth paragraph:

On 8 January 2014, the defendant made a similar decision in respect of the 2014/15 academic year. This decision was challenged by judicial review and declared to be unlawful in R (West) v Rhondda Cynon Taf County Borough Council (2014) ELR 396. This decision was set aside on 23 May 2014. Judge Supperstone held that the councillors had made the decision without a proper explanation of the council's statutory duties or the necessary materials to properly discharge their statutory duties.

In other words, if lawmakers are misjudged by officials, the decision can be set aside by the courts – a key legal point. From the Western Judgment:

55. The problem in this case is that the significant report to Cabinet and accompanying documents make no reference to the Council's statutory obligations (other than the public sector equality duty) or identify any issues to be determined arising from those obligations. Apart from the Environmental Impact Assessment, all that was provided to Cabinet was a report detailing the outcome of the consultation exercise. From that report and the responses, Cabinet members would have read into what was stated in the responses about the issue of childcare adequacy. But they were not provided with a framework in which to consider and properly assess that issue.

56. I agree with Mr Giffin that, if it is accepted that child care is a relevant issue to be considered, it must be considered on the right basis, i.e. with a proper understanding of the local authority's statutory obligations in that regard. If so, due regard must be had to the statutory guidelines. Public authorities have a duty to ask themselves the right questions and to take reasonable steps to obtain the relevant information to enable them to give appropriate answers (Minister of Education and Science v Thamesside Metropolitan Borough Council (1977) AC 1014, p. 1065B).

57. In my judgment, Cabinet has not, in substance, properly considered the relevant statutory requirements as required by section 118 of the 1998 Act or section 22 of the 2006 Act. In my view, both grounds of challenge…

What compensation can there be for long-suffering local taxpayers other than seeing some councillors and officials go to jail? This kind of behaviour would surely fit the definition of “maladministration”. There is a statutory remedy for it. Article 92 of the Local Government Act 2000:

Payment in the event of fraud

(1) The relevant authorities:

(a) that any act carried out by or on behalf of an authority in the performance of its functions amounts to or may amount to maladministration; and

(b) If a person has been or is likely to be adversely affected by the conduct, the Authority may make a payment or provide any other benefit to the person as it considers appropriate.

(2) The functions conferred on the Greater London Authority by this clause may be exercised jointly on behalf of the Authority by the Mayor of London and the London Assembly.

(3) In this Article:

“Action” also includes inaction.

“relevant authority” has the same meaning as in Part 3 of this Act;

I argue that “may” in interpreting this law means “must.” See my video on local taxes for an explanation.

In summary, if I may say so myself, it is a proposed plan of action for those who wish to get their council tax refund.

• Obtain a copy of the council's “Statement of Accounts.”
• Obtain the council's “budget” document.
• Look for mentions of “unusable reserves.”
• If that figure exceeds the “cuts” then you at least have grounds to ask your Member of Parliament whether cuts have been made to services required by Parliamentary Act and check for yourself. Existing local pressure groups may be happy if you share this information with them.
• Any reductions made that are contrary to statutory requirements must be reported to a Section 151 Officer, who is responsible for representing taxpayers' interests.
• The report he submitted to lawmakers should result in the “cuts” being rectified through transfers of funds from reserves.
• Individuals who have suffered harm as a result of unjust administration may be entitled to compensation as described above.

If you decide to act along these lines, UK Constitution Group reports on your progress This is to avoid unnecessary duplication among counties. Due to increased activity since the Spring Meeting, we may have to limit the assistance we provide to members only.

Read Part 1 of this article.