Parish Council Precepts

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?

Figure 1 shows a typical example of how the money is divided up in most places.

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. In a few places, the Fire Service charge is included in the County charge. With a few exceptions, there are usually no Town or Parish Councils in a single tier Authority.

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.

Due to there having 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 precepts 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: 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 it 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 it 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."

The chart below shows just one example of how the Parish precept for one village in Hampshire has increased over the years.

Figure 2. The relative increases in Town/Parish Council Tax

Successive Government Ministers have done nothing to correct this non-capping anomaly. Indeed, when Phil Woolas was the Local Government Minister, the Is It Fair 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 Government 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 on to Towns and Parishes.

Towns and Parishes cannot 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.

Most Council Tax payers will consider it inefficient and wasteful to have to fund multiple tiers of local government, especially when one is not restrained by the government imposed cap. Fortunately, it is relatively simple to close this loop hole and so avoid excessive precept hikes in the future.

Abolish the Town or Parish Council.

Legislation already exists to abolish Town and Parish Councils through a Town/Parish Council Review. A Poll can be demanded in accordance with the Local Government Act 1972, Schedule 12, if not less than 10 or 1/3 of the Local Government Electors present at the Annual Parish meeting, whichever is the less, demand such a poll. This year's Annual Parish meeting will take place in April.

With acknowledgements to 'Is It Fair' - The Campaign for Reform of Council Tax - www.isitfair.co.uk