London Loses Over £900m In Uncollected Taxes Since 1996 - Hughes

12.00.00am UTC (GMT +0000) Fri 7th Nov 2003

Liberal Democrat London Mayoral candidate Simon Hughes MP

London's economy has lost £908 million in uncollected Council Tax since 1996, Liberal Democrat London Mayoral candidate Simon Hughes MP revealed today. In his speech to the Liberal Democrat London Regional Conference on Saturday, Mr Hughes will outline plans for the unfair Council Tax to be scrapped in favour of a fairer local income tax based on ability to pay.

Inaccurate council records, tax dodging, and the complicated bureaucracy of collecting Council Tax have left many inner and outer London boroughs out of pocket. Those who pay have been subsidising those who avoid the tax. The move would also improve collection rates and reduce administration costs.

Mr Hughes said:- "Council Tax is unfair, and inefficient. Millions of pounds do not get collected, often leaving the poorest households and poorest boroughs to foot the bill. Those who pay, pay more, or have their services cut instead."

"Four percent of the Council Tax take is spent on bureaucracy. In contrast income tax costs just over 1% to collect. This costly bureaucracy leaves less money for vital services."

"Scrapping council tax would save hundreds of millions in bureaucracy, stop people cheating the system and allow money to be returned to hard-pressed taxpayers."

"If elected Mayor, I would put pressure on Ministers to scrap the hated council tax and replace it with a fair local tax that takes account of people's ability to pay."

ENDS

Notes for Editors

• The Liberal Democrat London Regional Conference will be held Saturday 8th November 2003 at City University between 10.30am and 4.30pm. Council Tax Collection 29 Oct 2003 :

Column 303W Simon Hughes: To ask the Deputy Prime Minister what proportion of council tax due was collected in the London boroughs in each year since 1996. [135158]

Mr. Raynsford: The following table gives the in-year council tax collection rates for each London borough and the City of London for each year from 1995-96 to 2002-03.

In-year council tax collection rates(17)

Percentage

1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02

2002-03

Inner London

City of London 99.0 98.1 97.5 97.4 98.2 98.3 98.4 97.6

Camden 83.7 87.7 88.5 91.1 92.3 92.7 93.5 92.7

Greenwich 89.4 91.4 92.2 92.2 91.3 92.2 92.0 92.8

Hackney 78.8 79.4 78.1 74.5 67.9 67.8 74.0 79.5

Hammersmith and Fulham 87.4 87.6 89.1 92.3 93.2 93.8 94.5

95.1

Islington 80.8 83.0 88.3 88.9 90.2 90.0 91.5 88.4

Kensington and Chelsea 93.2 94.9 94.9 95.2 95.6 96.0 95.6

95.6

Lambeth 71.8 78.6 80.3 80.3 84.4 82.0 86.5 90.1

Lewisham 81.5 84.8 90.6 90.6 92.0 93.3 93.7 93.7

Southwark 83.7 84.7 81.9 81.3 80.2 87.1 90.2 92.0

Tower Hamlets 87.3 87.2 86.7 88.1 88.3 89.3 90.7 91.8

Wandsworth 88.6 87.9 90.9 91.4 92.8 94.0 94.5 94.8

Westminster 93.6 92.6 92.6 93.7 92.9 91.8 93.0 93.5

Average inner London 84.4 86.7 88.0 88.5 88.7 89.6 91.1

91.9

Outer London

Barking and Dagenham 95.4 94.9 95.0 95.3 94.7 94.0 94.5

91.8

Barnet 94.4 94.7 95.1 95.3 95.6 95.8 96.2 96.2

Bexley 96.4 96.2 94.5 94.2 94.9 95.4 95.7 96.0

Brent 87.0 87.6 89.5 91.4 90.4 92.0 91.1 89.5

Bromley 97.4 97.2 97.4 97.0 96.3 96.6 96.5 96.4

Croydon 93.4 92.1 92.4 92.8 91.7 91.9 93.9 94.7

Ealing 92.9 94.3 94.8 94.9 94.4 93.4 94.1 94.6

Enfield 90.8 91.8 91.8 93.5 93.7 94.4 94.6 94.6

Haringey 81.4 84.7 82.3 85.0 85.1 88.8 90.1 92.5

Harrow n/a 96.4 96.9 96.8 96.2 98.2 98.6 97.2

Havering 96.5 96.7 97.7 96.8 95.6 96.4 96.1 95.9

Hillingdon 93.9 94.3 95.0 95.7 95.0 95.6 96.5 95.2

Hounslow 88.8 92.7 91.9 91.4 93.4 94.0 93.9 93.8

Kingston upon Thames 97.3 97.1 93.9 91.9 93.7 94.0 95.9

96.5

Merton 96.9 94.4 95.5 95.1 95.2 95.7 95.6 96.5

Newham 76.9 81.0 82.0 83.1 83.3 84.9 86.8 90.0

Redbridge 94.7 95.6 96.1 96.1 95.7 95.5 95.7 95.7

Richmond upon Thames 96.4 97.0 97.3 96.2 96.7 97.0 97.6

97.6

Sutton 98.3 98.0 97.4 97.0 97.3 97.3 97.3 97.3

Waltham Forest 88.9 91.5 91.8 87.8 87.7 88.0 90.6 93.0

Average outer London 92.9 93.8 93.8 93.9 93.7 94.3 94.9

95.0

Average Greater London 90.1 91.4 91.8 92.1 92.1 92.8 93.7

94.1

(17) Amount of council tax due received by the end of the financial year as a percentage of the net collectable debit for the year.

Note: n/a = not available

£ million

1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02

2002-03

Inner London

City of London 1,331 1,417 1,571 1,830 2,091 2,280 2,551

2,644

Camden 37,056 43,630 50,506 58,740 60,660 60,840 65,780 69,600

Greenwich 29,234 36,751 42,630 46,802 48,267 50,108 52,074

56,861

Hackney 20,781 23,071 26,801 26,618 27,787 29,625 36,716 44,568

Hammersmith & Fulham 30,740 35,882 44,846 47,912 50,515 53,881

57,654 58,743

Islington 26,040 31,335 38,133 40,736 43,349 43,783 45,786

46,640

Kensington &, Chelsea 34,281 37,334 42,781 45,354 49,832 49,102

55,316 64,412

Lambeth 31,512 31,924 41,908 42,931 46,740 46,401 58,396 65,919

Lewisham 30,418 32,537 41,976 43,267 46,284 52,070 57,426

62,481

Southwark 26,694 34,584 38,100 43,211 45,193 52,919 55,892

61,468

Tower Hamlets 15,380 18,419 21,742 23,978 27,478 31,839 34,662

38,699

Wandsworth 27,209 35,719 38,825 30,242 36,648 40,158 46,130

41,475

Westminster 22,708 25,260 28,980 31,866 34,074 36,137 41,036

44,996

Total Inner London 333,384 387,863 458,799 483,487 518,918 549,143

609,419 658,506

Outer London

Barking & Dagenham 17,906 19,475 22,858 25,951 27,766 30,060

32,712 34,808

Barnet 62,897 68,042 75,680 83,756 87,787 97,072 103,031 108,870

Bexley 38,328 40,037 44,750 49,845 55,312 58,926 64,237 69,686

Brent 27,083 27,051 38,836 41,902 48,516 52,570 55,255 60,805

Bromley 55,687 60,924 68,076 71,584 78,385 86,353 97,867 105,146

Croydon 56,216 57,745 64,627 73,295 83,487 84,302 90,750 92,588

Haling 42,784 45,009 53,922 60,563 66,164 70,814 77,710 84,178

Enfield 44,005 46,958 53,461 57,529 63,150 67,115 75,117 82,041

Haringey 33,226 35,330 43,165 46,422 49,023 52,552 55,531

59,516

Harrow n/a 39,659 46,560 51,503 55,675 60,842 67,748 72,747

Havering 39,055 42,674 49,577 54,880 59,243 66,473 72,568

79,367

Hillingdon 41,846 43,968 49,477 55,678 61,194 67,696 74,588

81,231

Hounslow 35,478 39,162 44,479 47,402 52,496 58,158 64,650

69,485

Kingston upon Thames 28,585 30,454 33,410 36,394 42,231 47,128

52,594 58,606

Merton 34,447 37,134 42,613 46,781 49,435 54,335 60,845 65,371

Newham 19,112 20,040 24,894 26,810 30,400 33,,735 38,069 41,568

Redbridge 37,513 39,582 45,190 49,297 55,261 59,162 64,173

69,449

Richmond upon Thames 47,754 51,112 56,319 57,691 64,420 70,465

77,674 85,077

Sutton 33,569 35,534 39,166 43,716 47,441 50,690 55,524 61,623

Waltham Forest 32,313 36,215 44,685 44,065 46,192 49,544 53,829

57,988

Total Outer London n/a 816,105 941,745 1,025,064 1,123,578

1,217,992 1,334,472 1,440,150

Total Greater London n/a 1,203,968 1,400,544 1,508,551

1,642,496 1,767,135 1,943,891 2,098,656

What's Wrong With The Council Tax ?

Grossly unfair to people on low and medium incomes, especially pensioners The Council Tax takes no account of a person's income and their ability to pay tax. So a pensioner couple, living on a meagre income, can pay as much in Council Tax as a high earning professional couple. The poorest 20% of pensioners pay nearly 6 times more than the richest 20% of non-pensioners, as a proportion of their income.

Costly to collect and administer:

The total cost of simply administering the Council Tax system was £569 million in 2002/03. We estimate it costs almost 4 times as much to collect £1 in council tax, as it costs to collect £1 in income tax. The high costs result from having tax collection systems in each billing authority, plus the expensive council tax benefit system, which suffers from take-up problems. Costs will increase with the council tax revaluation planned by the Government.

The Council Tax Is Especially Unfair On Pensioners

Council tax as a share of the basic state pension has been rising over the last 10 years.

Last year state pensions were increased by just 2.6%

But council tax across the country increased by 13%

"2 million households, many of them pensioners, do not claim council tax benefit since the process is too demeaning or complex". Source: Municipal Journal

How Does The Government's Funding System Cause High Council Tax?

• A shortfall in grant from the Government, combined with

demands from Government to spend more explain this years dramatic increases in council tax across the country.

• The "gearing effect" means that large increases in Council

Tax were needed to fill the funding gap. The only alternative is service cuts.

This year's shortfall caused Council Tax to rise by 13%.

Richard Stokoe

Senior Liberal Democrat Press Officer for Simon Hughes MP Mayoral Campaign tel. 020 7227 1236 mobile 0772 08 38 351 fax 020 7227 1313 pager 07659 114613