Town halls ‘sitting on £20 billion’

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Published: Tuesday 10th February 2015 by The News Editor

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Councils are sitting on more than £20 billion in reserves and failing to collect revenue owed to them, Eric Pickles claimed as he warned town halls against raising tax bills for households.

The Communities and Local Government Secretary said 106 councils or police authorities in England were set to freeze bills, with eight expecting to cut the amount householders will pay from April.

But in a warning to others planning to send out higher council tax demands, Mr Pickles said further savings could be made before asking households to foot the bill.

Figures released by Mr Pickles’ department showed c ouncil reserves stood at £21.4 billion at the end of the last financial year – up from £14.3 billion in 2010-11 – an increase of 50%.

During the same period to wn halls failed to collect some £2.5 billion of council tax and arrears and lost £2.1 billion to fraud. They also have £220 billion worth of assets on their books, of which £2.5 billion is categorised as “surplus to requirements”, the Department for Communities and Local Government (DCLG) said.

MPs are expected to vote on the financial settlement for councils today, with the Local Government Association (LGA) warning authorities face an average 8.5% cut and insisting that keeping money in reserve was essential to protect services from future reductions in funding.

The LGA also blamed government cuts for the increase in unpaid council tax.

The DCLG figures showed Birmingham topped the table for council tax arrears, with £105.2 million owed by local taxpayers.

The Greater London Authority had almost £3 billion in reserve, but most of that was being held back for large transport schemes such as Crossrail. Hampshire was second on the list with £357 million while Manchester had the highest amount of surplus assets at £166 million.

The Government has promised £275 million to councils which freeze their council tax in 2015/16 and has called on all authorities to take up the offer.

Mr Pickles said: “It’s great news that so many local authorities have already promised to keep bills down for taxpayers and take up our support for freezing or reducing council tax.

“Councils account for a quarter of public spending and every bit of the public sector must do its bit to pay off the deficit. But there are more than enough sensible savings to be made before hard-working families should have to foot any more of the bill.

“Reserves have rocketed up in the past few years and councils could be making better use of assets to keep taxes down and protect frontline services, while at the same time doing more to stop the billions they are losing to fraud and collecting more council tax arrears.”

LGA c hairman David Sparks said: “Reserves are all that stands between councils and financial collapse. With further cuts expected in the next Parliament along with ever-growing pressure on services, putting aside money for the difficult years ahead is prudent financial management.

“Councils work hard to ensure council tax and business rates have among the highest collection rates of any tax. The exchequer would be billions of pounds better off each year if central government’s collection rates matched those of councils.

“The slight increase in unpaid council tax will come as little surprise to those in local government, who warned that this would be a consequence of government cutting funding for council tax support. This cut has left local authorities with little option but to reduce discounts for people on low incomes, some of whom have found it a struggle to pay.

“The Local Government Finance Settlement confirms that core central government funding to councils will be reduced by 8.5% in April. Local authorities are now in the process of finalising next year’s budgets. These savings will be the most difficult yet, and it is unavoidable that they will have an impact on local government’s ability to improve people’s quality of life and support local businesses.

“Local services need to be adequately funded in the next Parliament if they are going to survive the next few years.”

Published: Tuesday 10th February 2015 by The News Editor

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