Harringay, Haringey - So Good they Spelt it Twice!
From £125 to £102: has Haringey quietly reduced their Court Summons charge?
I NOTE that Reverend Paul Nicolson and Taxpayer's Against Poverty have this morning issued a press release, being an update on the charging of late and non-payers of council tax, for council tax summons and liability orders costs.
The public is still waiting for the Auditor's report about what would be a fair figure. Waiting, because this is not in the public domain but there has doubtless been discussion behind closed doors. Waiting, since the High Court case earlier this year (previous post).
It seems that there are discussions going on in private which should be taking place in public.
Some points to note:
- The cost of a recent summons was reduced by 18%: from £125 to £102
- It is unclear how, why or when this cost was reduced
- We are now five months on from the High Court decision
- The Council's Auditor, Grant Thornton, has yet to publish a report
If £102 is indeed the new price – to some of the poorest in the Borough – then it still looks high to me. The High Court judge had pointed out that the Magistrates were the only thing standing in the way of Haringey Council charging … whatever it wanted.
Should Haringey Council be able, in effect, to charge its "customers" whatever the market will bear?
The £23 cut also begs the question raised by Rev. Nicolson: if this is the new price, does it imply that there has been overcharging over the last five years?
TAP suggested that the overcharging amounts to more than £1,000,000. I would add, from a Labour-run Council and falling on amongst the poorest. Perhaps Majority Group Councillors have been active about this behind the scenes: however, I'm not aware of it.
Has the Council managed to persuade their Auditor – whom they employ – that this is a fair and reasonable reflection of Haringey Council's own extra, marginal or incremental costs?
Has some quiet, private decision been made behind closed doors?
Where lies the public interest in all this?
Whatever decision is concluded or charging structure is agreed, it is likely to be looked at with interest by local authorities throughout the country.
CDC
Haringey Councillor
Liberal Democrat Party
Tags for Forum Posts: High Court, TAP, Taxpayers against poverty, Tottenham Magistrates, human, indefensible, moral vacuum, £125
Replies to This Discussion
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Permalink Reply by Over2you on
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Any downward movement of the level of costs is obviously a success. It is also a bonus that they are now applied in two stages as the law provides. However, this current arrangement I do hope is provisional and the level drastically reduced when the external auditor's report is out.
It would be interesting to know at what stage Haringey applies the summons costs to the defendant's account. Other billing authorities do so at the same time when the court issues the summons, i.e., before the council serves the summons on the defendant.
In that case the costs incurred by the Council in respect of issuing the summons (£102.00) may lawfully (by virtue of their application on the summons issue) only include the Council’s expenditure up until that point. A costs breakdown (if one was provided) would almost certainly attribute expenditure to the summons which the council incurs after this point.
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Auditor rejects Haringey’s CT costs refuses report in the public in...
Auditor, not to make an application to the court for a declaration that an item of account is contrary to law.
Grant Thornton, Haringey's external auditor has bottled out. Presumably it doesn't want to put its contract in jeopardy and risk becoming an ex-external auditor to the council. I guess the firm would be committing perjury or something like that if it endorsed the council's costs in a public interest report and is why it refuses to do so.
The appointment of private firms as auditors to local authorities is obviously not in the public interest.
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Before even getting started on analysing Grant Thornton's report there's this, which stood out like a sore thumb (page 6):
In our opinion the Council has adopted an approach which is aimed at excluding costs not associated with a summons and whilst the basis would ideally be less subjective there is no evidence to suggest that the Council is deliberately apportioning inappropriate costs to increase the fee charged on summonses as a means to increase the income they receive from charging these costs. We are satisfied that the Council has not set out with any intention to raise income to cover other General Fund expenditure.
Perhaps the auditor hadn't seen this:
Haringey Council's 2004 Audit and Finance Scrutiny Panel Review of Income Collection (now removed from website), details at paragraph 6.11 the relevant matter, as follows:
6.11. Court Costs
6.11.1. The Review Panel found that other councils had obtained agreement to raise Court Costs recharged to non-payers by a significant level. This charge is intended to act as a deterrent to both late and non-payers and enables councils to fund improved recovery measures. The Review Panel concluded that the Benefits and Local Taxation Service could improve performance by ensuring that it agrees the highest possible level of Court Costs to be charged to non-payers
Paragraph 5.10 (second to last bullet point) in Haringey’s Budget Monitoring report 2014/15 dated 16 September 2014 documents that court costs income props up other council expenditure (customer services) by offsetting an otherwise greater overspend:
£400k overspend in customer services predominately due to slippage in delivery of the 2014/15 savings (£660k) partially offset by forecast over achievement of court costs income.
Item 2 (page 15) of Haringey’s Financial Outturn 2011/12 details that an overachievement of court costs income lessened the impact of over spends on salaries and postage costs:
Revs, Bens & customer services Management Costs - the underlying cause of this over spend is the higher than planned demand for services particularly around benefits. This has led to notable over spends on salaries and postage costs. These pressures have mitigated down by an overachievement of income from reimbursement of court costs incurred during recovery activity.
Page 5 of Haringey’s explanation of variances from budget (Outturn 2013/14) documented that it had over achieved with court cost income therefore part of an under spend of £446k which contributed to an under spend of £1.32 million Revenues, Benefits & customer services budget. Incidentally, the council saved, rather than used funding given it by the government to pay council tax benefit claimants:
Revenues, Benefits & customer services - Management - the funding and responsibility for local welfare provision (Support Fund) transferred to local authorities from April 2013. Haringey along with many other authorities has significantly underspent this grant (£877k) and proposes to transfer it to a reserve for drawdown in the future. This is particularly important as the government has confirmed that funding will cease from 2015/16. The remaining under spend (£446k) is due to over achievement of court cost income and receipt of one-off grant funding largely in support of the changes to welfare and universal credit.
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Permalink Reply by Clive Carter on
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According to a report in the Tottenham Independent (Report criticises Haringey Council in summons dispute) it has been claimed that the 'full' report won't be published because it's not in the public interest.
This may be an interpretation of the request made by Rev. Nicolson, of the Auditor, to make a Report in the Public Interest. This seems to have been somewhat fudged.
Taxpayers Against Poverty have published a letter that is, if not a Report in the Public Interest, then it nonetheless makes some criticisms, not all of which are coherent or consistent.
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Looking again at the letter, it appears that the auditor has been selective about which laws and guidance it deems should be taken into account in the matter, which on the whole concludes that Haringey's approach to its breakdown is reasonable.
You couldn't think of a better example of someone knowing which side their bread was buttered.
Quote from the auditor's letter:
Mrs Justice Andrews reasoning in paragraph 45 of her judgement is that it would not be practical for the Council to carry out and provide a detailed calculation of the actual costs incurred in each and every case. Therefore, the exercise has been completed by costing of a standard average case.
One thing that the auditor has conveniently neglected in the letter from which the above is quoted is that the Regulations in fact provide for individual costs and is why the government provided guidance in June 2013 (reiterated from a Council Tax Practice Note in September 1993) stating that 'while it is likely that authorities will have discussed costs with the Clerk to Justices it should be recognised that the Court may wish to be satisfied that the amount claimed by way of costs in any individual case is no more than that reasonably incurred by the authority’. The court would not require satisfying on an individual basis for any arbitrary reason, but because an individual sought to challenge the costs, which is why regulation 35(1) of the Regulations provides that a single liability order may deal with one person and one amount. Regulation 35, so far as is relevant, is as follows:
Liability orders: further provision
35.—(1) A single liability order may deal with one person and one such amount (or aggregate amount) as is mentioned in regulation 34(7) and (8), or, if the court thinks fit, may deal with more than one person and more than one such amount.
Nicolson v Tottenham Magistrates agrees (para 46) in so much as it considers in principle, provided that due consideration is given to the dangers of artificially inflating costs, it may be a legitimate approach to provide an average figure which could be levied across the board in "standard" cases. It does however go further and add that such costs ‘could be amplified in circumstances where there was justification for incurring additional legal and/or administrative costs’.
This approach would require the average figure being derived from the aggregate recoverable costs, which (i) excluded any expenditure that was not common to every application, and (ii) be properly referable to the summons/liability order. That is to say in broad terms the exclusion of those elements which are referred to here (paras 64-101). It would then be open to the council in cases where it incurred additional administrative costs (where they were lawful and there was justification to do so) to amplify the standard costs, but again subject to them always being properly referable to the enforcement process.
In other words, if the council wishes to lessen the administrative burden of calculating the costs in each case (and comply with the Regulations), it must base its costing NOT on a standard average case, but in respect of a taxpayer who simply receives a summons and settles outstanding liability before the date of the hearing without contacting the council to query the demand.
If the Regulations were applied appropriately, the consequences would be that the majority of Staff costs (£914,400), Overheads (£1,165,200) and all of the Council Tax Reduction Scheme (£774,000) are not permissible in respect of re-charging expenditure for instituting the complaint.
What is set-out above should have been enough to alert the auditor that Haringey's claims were not reasonable in the context of the relevant law which governs costs and should therefore have used its discretion to apply to the Court for a declaration that an item of account is contrary to law under section 17(1) of the 1998 Act, and issued a report in the public interest.
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It would be understandable, with the obstacles put in the way by Haringey Borough Council, Magistrates' court and even the council's auditor contractor, Grant Thornton, if the Reverend at this point took the struggle no further.
It has however been announced today on the the taxpayers against poverty website that Grant Thornton's decision not to apply to the court for a declaration that an item of account is contrary to law under section 17(1) of the Audit Commission Act 1998, is to be appealed, by seeking a mandatory order through a claim for judicial review.
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Thanks for the update O2Y.
I note that Grant Thornton have appointed Bates, Wells and Braithwaite as their solicitors (who are now consulting counsel).
Bates, Wells and Braithwaite have in the past been engaged by Haringey Council.
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The Institute or Revenues Rating and Valuation (IRRV) are still "Cashing in"on the Reverend's High Court win with a 3 for 2 deal.
Practitioners will be provided with an update on the decision in ‘R (On the application of the Reverend Paul Nicolson) and Tottenham Magistrates 2015’ regarding costs that can be applied for by a billing authority at a liability order hearing. It will look at how billing authorities and magistrate courts have reacted to the decision and in particular, how billing authorities have gone about calculating their costs. There will be an Open Forum for delegates share best / good practice.
The speaker is Gary Watson IRRV (HONS), Deputy Chief Executive, IRRV.
FEES
The fee structure for this series of meetings is as follows:-
£135+vat - IRRV Members
£165+vat - Members of the IRRV Forum or Benefits Advisory Services or Organisational membership
£195+vat - Non-members
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Permalink Reply by Alan Stanton on
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Thanks to Clive Carter and especially to Over2You - whoever she or he may be - for these detailed and helpful updates.
Clive, can you tell us whether or not the Council have provided councillors with such updates? Or whether there have been any Press Releases? Hopefully, both would set out the factual position in clear, neutral terms.
The last comment about from Over2you about "cashing-in", made me smile. Especially the bit about delegates sharing "best / good practice". Obviously, the aim should be to share: fair, accurate, and scrupulously legal practice.
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Alan last week I substituted for a colleague on the Corporate Committee. I would encourage you to have a look at some of the papers for that Committee (below), especially the Auditor's reports:
i) External Audit – progress update (Report of Grant Thornton)
ii) Annual Audit Letter (Report of Grant Thornton)
Suggest go to this page and download "Second despatch"
A few things may catch your eye.
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(BTW, I have previously expressed bemusement at the extent of your recommended reading lists for the general public. But I must report that an associate told me yesterday that he often follows up your links and he finds them interesting and helpful)
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There are some slides that presumably go with the IRRV presentations (3 for 2 deal). The slides relating to 30 September 2015 entitled "Court Costs and Update" have been included in a pdf document, which if you haven't seen them, might be worth a look.
Another with a reference to 31 July 2015 entitled "Local Taxation Update" says it all at Page 11 of the document by implying what has been suspected all along that local authorities have aimed to cover the full budget for their recovery of Council Tax admin.
Council Tax
When calculating the costs – no account should be taken of anything as follows:
–Post LO
–General administration of Council Tax
–no way now to include the full costs of the Recovery sectionAt Page 13 of the same slide presentation it is evident the relevant Council Tax Regulations have not entirely been understood:
Council Tax
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No requirement for individual costs on a case by case basisCould charge more for difficult cases......
The amount claimed by way of costs in any individual case must be no more than that reasonably incurred by the billing authority (para 51). Therefore, if the billing authority wanted to take advantage of streamlining the administration process by applying a standard sum in all cases (paras 47–51), in order for it to be done lawfully, it would need to forfeit each element of expenditure it incurs that is not common to every application (the majority of costs which council's account for).
In other words, a standard sum could not exceed that incurred by the authority in a case where the least expenditure is attributed, which would in practice relate to a taxpayer settling his outstanding debt on receipt of a summons without contacting the council on any issue. Deriving a figure therefore from the ‘recoverable costs’ which is split between an estimated number of summons, can not be lawful; even less so if the number of summons is reduced to factor in an estimate for those withdrawn, waived and those in respect of unrecoverable costs. The least cost case is the only basis on which to determine a standard sum if the aim is to eliminate the administrative burden of calculating the costs in each case, whilst at the same time complying with the regulations which require that the costs be no more than that incurred by the authority in any individual case.
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Another case won in the High Court (council tax liability order costs).
Ewing v Highbury Corner Magistrates Court & Anor [2015] EWHC 3788
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11. The substantial question raised in lengthy written submissions and oral argument can be resolved without recourse, as the court was invited, to R v Willesden Justices ex parte Utley [1947] 1 KB 397 and other authorities on criminal sentencing. Regulation 34(7) of the Council Tax (Administration and Enforcement) Regulations 1992 (SI 1992 No.613) provides that when granting a liability order the court shall make an order reflecting the aggregate of the outstanding council tax and a sum of an amount equal to the costs reasonably incurred by the applicant in obtaining the order.
12. Accordingly it is not necessary to form a view on the liability of the Claimant in the sum of £137.02. That is a matter which the Interested Party local authority must decide. The order made was the aggregate of the costs and the debt, the costs part of the order falls away, so must the balance which went to make up the aggregate. The liability order is also quashed.
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