COUNCIL TAX RATE INCREASE

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Council tax is to rise by 2.4% which is the lowest since 1997. Council leader Chris Williamson said his party had achieved its budget without making frontline cuts by making careful efficiency savings. Included in the cuts was the restructuring of the council's senior management team, saving £120,000, while the social services management team was also restructured, saving a further £238,000. According to the council, it has saved a further £1.3m "managing pressures".

These included the removal of surpluses in a number of contingency funds. A cut in a fund within the chief executive's department saved £233,000. Other savings included £64,000 saved each year because the bus station is out of action. The savings come from water rates, energy bills and maintenance costs and another £2.1m has been saved through a reorganisation of the council's management of money.

The council said it would save £300,000 by limiting the number of workers from agencies it employs, while £200,000 would be saved by limiting the rollout of the Rethink Recycling Scheme to only two new areas instead of four. The council estimates it will save a total of £500,000 from dozens of smaller savings. A reduction in the budgets of area panels, the groups that allow people to get involved with issues affecting their communities, will save £25,000.

The council will also need to raise an extra £1.5m during the next year and the money is set to be raised by a rise in car parking charges as well fees for car boot sellers and traders. There will also be increased ticket costs at the Assembly Rooms and the Guildhall, while both venues will target more commercial events to increase revenue. (Source: Derby Evening Telegraph, Mar/06)

Council tax rises are set to soar by up to a THIRD. Labour has drawn up secret plans to hit hard-working homeowners who have benefited from rising property prices. Everyone who has a house worth more than £120,000 will face a massive hike. Families will be penalised for striving to live in a decent home, while those claiming dole will have their bills SCRAPPED. Every home in Britain will be revalued and the number of council tax bands increased from eight to 11.

Those in the top category will pay FIVE times more than people in the lowest. People over 70 will also have their bills scrapped, along with the disabled. And there will be discounts for single parents and the low paid. The bill for a home worth between £162,001 to £223,000 would be £2,000.

Higher rates will be introduced first in Northern Ireland in 2006 and rolled out elsewhere the following year. The province's finance minister Ian Pearson admitted there would be "significant shifts in bills". Tory local government spokeswoman Caroline Spelman asked, "Where is the incentive to work hard, save to buy a decent home and provide for your family?"

When the council tax replaced the poll tax in 1993, homes were placed into one of eight property price bands, from A to H, based on the value of the property in April 1991. The system works so that those in the top band pay three times as much council tax as those in the bottom. The "middle" Band D - normally quoted as the average band, pays one and a half times Band A. Since then, prices have rocketed and this revaluation is about updating the values last taken 14 years ago but it is important to remember that this is not an exercise in raising more money.

The total amount raised in council tax across England will remain roughly the same. The exercise is about how that burden is shared between properties of different values. In 1991 properties were checked largely by estate agents and valuers. This time technology will play a much bigger role, with fewer site visits to individual homes. The exercise will be conducted by the Valuation Office Agency (VOA), an arm of the Inland Revenue. They will use computer modelling technology to speed up the process, using sales information and data about number of rooms, floor area and the age of properties.

Although the same system has been used in the USA, Australia and many parts of Europe, it has never been applied on such a big scale before. The VOA says it will improve consistency. Does the fact a home has more than doubled in value since 1991 mean I will automatically go into a higher band? No, it depends whether your house has gone up by more or less than the average. In a simple words, if all our homes had gone up by the same percentage since 1991, we would all stay in the same band. All you would have to do would be to change the price label on that band.

But in the real world, some houses have increased in value more than others. The Valuation Office should be allocating properties to bands in the summer of 2006, with draft valuation lists being made available from September 2006. You will be able to appeal if you think your banding is wrong, but not until April 2007. At the moment Sir Michael Lyons is conducting a review into local government taxation which will report towards the end of 2005.

One option for reform is to make the tax more progressive across the property values by adding new price bands at the top and bottom. In Wales, they have already added a ninth "Band I" for the highest-priced properties where households are charged three and a half times as much as those in the bottom Band A. There is also speculation that he may recommend a system of "regional" price bands to reflect the big difference in prices between one area and another.