lgo complaint – supporting document #8

37
LGO Complaint re, North East Lincs Council – Evidence 16 Sept to 17 Oct 2012 Letters to North East Lincolnshire Council’s head of revenues in the matter of Council Tax Reminders, Summonses and Recovery Between Dates 16 September – 17 October 2012 Reference: NG/CTR/12912 Copied to: North East Lincolnshire Council’s External Auditor Grimsby Magistrates’ court Contents 16 September 2012.......................................................... 17 September 2012.......................................................... 18 September 2012.......................................................... 19 September 2012.......................................................... 20 September 2012.......................................................... 21 September 2012.......................................................... 24 September 2012.......................................................... 25 September 2012.......................................................... 26 September 2012.......................................................... 27 September 2012.......................................................... 28 September 2012.......................................................... 01 October 2012.......................................................... 17 October 2012.......................................................... 1 2 6 9 11 12 17 20 23 26 29 31 35

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Letters to head of revenues /Auditor/ evidence for Magistrates’ court between 16 September – 17 October 2012 reference: NG/CTR/12912. Supporting document (SD #8) to complaint to the Local Government Ombudsman. Original file name (Evidence 16 Sept – 17 Oct 2012.pdf)

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Page 1: LGO Complaint – Supporting Document #8

LGO Complaint re, North East Lincs Council – Evidence 16 Sept to 17 Oct 2012

Letters to North East Lincolnshire Council’s head of revenues in the matter of

Council Tax Reminders, Summonses and Recovery

Between Dates

16 September – 17 October 2012

Reference: – NG/CTR/12912

Copied to: – North East Lincolnshire Council’s External Auditor

– Grimsby Magistrates’ court

Contents

16 September 2012..........................................................

17 September 2012..........................................................

18 September 2012..........................................................

19 September 2012..........................................................

20 September 2012..........................................................

21 September 2012..........................................................

24 September 2012..........................................................

25 September 2012..........................................................

26 September 2012..........................................................

27 September 2012..........................................................

28 September 2012..........................................................

01 October 2012..........................................................

17 October 2012..........................................................

1

2

6

9

11

12

17

20

23

26

29

31

35

Page 2: LGO Complaint – Supporting Document #8

Evidence 16 September 2012 – LGO Complaint, Supporting Document #8

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16 September 2012

I’m writing in connection with the reminder received from the council’s Income and

Payments Service dated 12 September 2012. This raises many concerns about which I’d like

to query, and will be doing so in future correspondence.

To begin with however, it is obvious this letter has not been dealt with by a member of staff

as the letter is introduced by "Dear Sir or Madam", despite the taxpayer’s name being printed

on the same document. This in itself is no revelation but highlights that the process is

automated. It is therefore inconceivable that the £70 quoted for issuing a summons would be

reasonably incurred by the council in accordance with Regulation 34 of the Council Tax

(Administration and Enforcement) Regulations 1992.

Automation means reminder notices and summonses etc, are printed and sent out “en masse”,

and almost certainly benefiting from discounted postage costs from outsourced postal

services. Operational costs will be further minimised as this part of the recovery process is

geared around set dates in the system, which, if no payment activity is detected, triggers

dispatchment of the relevant notices.

The "conveyor belt" style operations involving bulk processing of court orders have seen

North East Lincolnshire council rake in revenue of £174,334 (after the court takes its cut) in

respect of an hour or so's visit to the Magistrates’ court. Figures relate to a hearing where

2,602 householders incurred £70 costs who were all summoned to appear before Magistrates

at the same time and date.

These are preliminary queries to which I’ll be adding in the coming days, but as a final

comment, regarding the format of the reminder, it seems inappropriate that the letter should

be introduced with the phrase, “It appears from my records”, when the correspondence has

been clearly computer generated, nor should it be unsigned if wanting to appear authentically

personalised.

Page 3: LGO Complaint – Supporting Document #8

Evidence 17 September 2012 – LGO Complaint, Supporting Document #8

2

17 September 2012

Further to my 16 September correspondence I wish to add further to the issues raised.

I’ll begin by asking under whose authority, can the council impose predetermine costs for

issuing a summons; for example the stated £70 in the reminder letter. Additionally I’m going

to introduce my concerns regarding the legality of increasing and front loading these

penalties.

Determining costs imposed before case is heard

Local Authorities setting costs themselves at predetermined levels will facilitate a greater

degree of automation in processing liability orders; however, this is the responsibility of the

court. The Council should not be deciding the amount it thinks should be taken from residents

in costs, though it is obvious why authorities favour doing this. It enables rubber stamping

orders in their thousands, rendering the Magistrates’ need to award appropriate costs at the

hearing redundant.

An appropriate amount of costs awarded to the Council will not be known in advance and

therefore cannot, with any credibility, be agreed in advance. To fix court costs over an

indefinite period would appear unlawful, because neither the council nor the court will know

the income level with respect residents paying these costs. The number applied for and

consequently rubber stamped at the bulk hearing varies, and so should the costs if they’re to

be claimed in accordance with Regulation 34 of the Council Tax (Administration and

Enforcement) Regulations 1992.

The liberties taken go a step further with the free rein the council is given by the Magistrates’

court for determining its own level of costs as revealed in the council’s letter to the courts

Deputy Justices’ Clerk.

Continued....................

Page 4: LGO Complaint – Supporting Document #8

Evidence 17 September 2012 – LGO Complaint, Supporting Document #8

3

Grimsby Magistrates' Court North East Lincolnshire DN31 1NH Dear Deputy Justices' Clerk

Court Costs for Council Tax and National Non Domestic Rates

I am writing to advise you that North East Lincolnshire Council has taken the decision to

increase the court costs which it charges to tax payers for the non payment of Council Tax and

National Non Domestic Rates.

The costs to be charged for a summons for Council Tax and National Non Domestic Rates will

be £70.00. There will be no additional costs for the liability order. The increase will take effect

from 1st April 2011.

If there is any further information you require then please don't hesitate to contact me directly

on 01472 ****** or via e mail at *****.

I would like to take this opportunity to express my thanks for your continued cooperation and

support.

Yours Sincerely

This suggests it is unlikely the authority is ever required to justify their claims in respect of

the costs it incurs.

As the process of initiating and producing reminder, threatening letters and summonses, is

automated, the costs attributable for each individual will not remain constant over a variation

in court application numbers. In other words, the council’s incurred costs would not increase

in direct proportion with the number of summons issued, and is key to why costs cannot be

fixed lawfully in advance.

Continued....................

Page 5: LGO Complaint – Supporting Document #8

Evidence 17 September 2012 – LGO Complaint, Supporting Document #8

4

As an example:

Fixed costs including staff, computer program etc., are £400 per annum. 100 summonses

having variable costs for stationary and postage of £1/document are produced in a year.

Costs incurred to the council will be £500. If costs were set at a level of £5 per summons

then this would be reasonably incurred.

If applications doubled to 200 in a year, then the incurred cost to the council per summons

would be £3. However, because the cost imposed on the debtor is set at £5, a disparity

exists between the costs incurred by the council and those imposed on the debtor. This

would have to be considered inappropriate profit.

Therefore a claim for costs should be presented with supporting evidence at each bulk

application and awarded only if the court found them to have been reasonably incurred.

An accurate number of householders taken to court each year would need to be known for the

authorities to take advantage of standardising costs within any degree of accuracy. This

should be impossible as many variables are likely to affect the figure.

Clearly there should be no reference to any agreed fixed costs on neither reminder letters nor

summons documents notifying the defendant to attend court. This should be determined at the

court hearing.

If due process were to be followed, then the council would need to itemise the time and effort

expended on each element of the case after which Magistrates would need to use discretion in

awarding the appropriate costs. This would essentially take into account the number of

defendants incurring penalties.

The majority of costs currently claimed by the council would likely be identified as

inappropriate profit, especially when applications exceed certain levels. With this considered,

and discounting costs which would be incurred regardless of the applications being made,

then only those specific to the claim would be awarded.

Increasing and front loading penalties

I have a copy of the council’s standard computer generated reminder which was sent out to its

residents prior to the composition change to costs, detailed in the letter to the Magistrates

court above.

The relevant paragraph read as follows:

If recovery action is taken there will be costs of £32.00 if a summons is issued, and further costs of

£25.00 if an application is made to the Magistrate’s Court for a Liability Order.

Page 6: LGO Complaint – Supporting Document #8

Evidence 17 September 2012 – LGO Complaint, Supporting Document #8

5

The corresponding paragraph now reads:

If payment is not received a summons will be issued without any further notice being given to you

and you will incur £70.00 costs.

This represents a hike of almost 120% in costs imposed on householders for issuing a

summons, and an overall increase of costs in connection with the application of 23%.

I will be dealing with this in more depth in a future correspondence and enquiring into the

legality of hiking costs for the purpose of propping up its finances, front loading all costs to

the summons, (apparently breaching Council Tax Regulations) and the historical reasons

detailed in various Cabinet documents for increasing these costs.

Page 7: LGO Complaint – Supporting Document #8

Evidence 18 September 2012 – LGO Complaint, Supporting Document #8

6

18 September 2012

I’m writing further to my 17 September letter in connection with the council’s reminder and

threat of court action. I am now in a position to expand on my initial concerns with regards

North East Lincolnshire council unlawfully hiking-up the summons penalty by 120% and

front loading all costs to the initial stage of recovery.

The Council Tax Regulations are clear in stating that costs claimed should only be those

which the authority reasonably incurs. They also distinguish between costs reasonably

incurred in connection with the summons, regulation 34(5)(b) and those for obtaining the

order, (7)(b).

34(5)(b) a sum of an amount equal to the costs reasonably incurred

by the authority in connection with the application up to the

time of the payment or tender,

34(7)(b) a sum of an amount equal to the costs reasonably incurred

by the applicant in obtaining the order.

NELC has committed a breach of these regulations by front loading all the charge to the

summons fee. Combining the charges, means everybody who receives a summons, will now

automatically incur liability order costs. Those who settle their debt prior to court action are

unnecessarily being penalised and would not have incurred this second charge if the two fees

were charged in accordance with the law – which is independently.

Council Tax Regulations state under Regulation 34 that the fees are incurred progressively.

Firstly at a stage after the summons is issued (but an indeterminate time before the hearing).

Secondly, at a point when the liability order is granted, if the account holder has not settled

the debt.

Costs then are potentially incurred in two stages, but there is no provision in the regulations

for an authority to predetermine the level. Regulations state that Costs reasonably incurred by

the authority should be imposed, and no reference is made to set fees.

North East Lincolnshire Council is therefore unlawfully collecting penalties from debtors who

settle their accounts prior to any court action. This procedure is not in accordance with

Regulation 34(5) of the Council Tax Regulations, which requires that the authority shall not

proceed with the application if the aggregate of the outstanding debt and costs reasonably

incurred by the authority is paid or tendered to it.

Page 8: LGO Complaint – Supporting Document #8

Evidence 18 September 2012 Supporting Document #8

7

Essentially authorities are not lawfully permitted to charge debtors the liability order costs

detailed in Regulation 34(7)(b) in such circumstances; however, by charging these costs

prematurely at the summons stage, they are doing exactly this.

Additional £188k annually through increased summons costs

North East Lincolnshire Council detailed in its 2011 budget proposals that it would raise a

forecasted additional £752,000 over 4 years by increasing the summons cost. There was no

supporting evidence to justify the increase. Hiking-up the costs and combining both the

summons and liability order penalties into one were measures taken to achieve the increase in

revenue.

The council is not permitted to make a profit and these costs should not be used as an

instrument to manipulate income generated by the authority. This however, was blatantly the

council’s intention when is set out its budget report of savings proposals. These were put

forward as a result of council discussions taking part in private session where the press and

public were excluded as the details were deemed to be exempt from publication.

It proposed to "Increase summons cost" and was listed in their budget proposals under the

heading "Income Generation" and forecasted additional revenue of £188,000 for each of the

following 4 years. Clearly this is acting outside the law when such fees are to cover Council

Tax recovery, not constitute savings by way of income generation.

APPENDIX 6

SAVINGS PROPOSALS

Ref Proposal 2011/12

£’000

2012/13

£’000

2013/14

£’000

2014/15

£’000

523 1,952 2,802 3,117

Income Generation

ASC3

ASC4

ASC4

BS 10

Raising Income

Additional Funding through the RSG

Maximising ASC efficiency delivery

Increase summons cost

3,005

188

80

2,915

188

180

900

2,015

188

280

900

2,015

188

In another cabinet document “Council priorities, budget 2011/12 and medium term financial

plan..” it reveals under the heading “Income Generation” at item 1.52, that the Magistrates'

court played no part in authorising the increase in costs.

Page 9: LGO Complaint – Supporting Document #8

Evidence 18 September 2012 – LGO Complaint, Supporting Document #8

8

Income Generation

1.52 In relation to proposed areas for charging to be introduced, 81 per cent

favoured increased charges for summonses compared to 57 per cent who

supported charging for replacement bins or garden waste collections. Only

15 per cent were not in favour of any charges being introduced.

Clearly the decision to increase charges for the summons had not been brought about by

additional costs incurred by the council. It was intended simply to plug a hole in its finances.

This is reinforced by the proposals being put to a vote.

The law says awarded costs must be incurred, so increasing them on the strength of a ballot is

clear evidence that additional incurred costs to the council was not a factor, and the decision

made, simply to generate income.

In a future correspondence I will be supplying evidence from Cabinet documents etc., which

supports my allegations that North East Lincolnshire council has habitually raised penalties

imposed on its residents for apparently no other reason than to raise additional revenue.

Page 10: LGO Complaint – Supporting Document #8

Evidence 19 September 2012 – LGO Complaint, Supporting Document #8

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19 September 2012

Further to my 18 September letter, I have now sorted the relevant documents so I can furnish

further evidence to support claims that penalty increases have been imposed on North East

Lincolnshire residents for purposes other than compensating a corresponding increase in

incurred costs to the council.

Increase summons costs to fund additional staff

CABINET

DATE

REPORT OF

SUBJECT

SUMMARY

8th November 2002

Director of Finance

Revenues and Benefits Service

Staffing Issues.

The report identifies ways of funding

additional resources to ensure the

backlog of work that has arisen due

to changes in the IT system are

addressed.

RECOMMENDATIONS:

That Cabinet consider the following recommendations:

• that the Council Tax establishment is increased by two members of staff.

• that the Council Tax summons cost be increased from £10 to £15 with

immediate effect.

A cabinet document from November 2002 addressed staffing issues and the backlog of work

created within the council’s Revenues and Benefits department due to problems encountered

with IT systems.

The document highlighted that employing extra staff in the Council tax department was

funded by raising the summons penalty by 50%.

At a weekly cost of almost £1,200 for each worker, a total of around £9,500 was paid out each

week to hire agency staff in Revenues and Benefits to overcome problems brought about by

Page 11: LGO Complaint – Supporting Document #8

Evidence 19 September 2012 – LGO Complaint, Supporting Document #8

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complications in implementing a new IT system.

However, it is more relevant to focus on how the council funded extra members of staff to

sort out the IT issues. It was council taxpayers, penalised by summons costs who more than

funded these extra members of staff because of a correspondingly disproportionate increase in

the Summons fee. This of course reinforces the assertion that the council uses liability order

applications as an instrument to manipulate income generated by the authority for purposes

other than costs incurred specifically for the work attributable to issuing the summons.

The document implied that the Council could rely on at least 6,000 residents would be caught

out each year by the Summons fee thus raising in excess of the additional £30,000 required to

fund two extra staff to clear the backlog of work caused by IT complications.

However, the figure based on the subsequent three years average was not 6,000 but 12,277

householders liable for the summons penalty. The 50% or £5 increase in the Summons fee

would therefore pay for in excess of four staff; more than double what it was looking to fund

by residents caught out with these penalties.

The whole picture dramatically changes when you look at how profits increased by the second

year into the new arrangement. For whatever reason the summons took a further 50% hike to

£30, now 200% higher than before additional staff were employed. The equivalent number of

extra staff the council would be able to pay for from the additional revenue would top sixteen.

Whether or not the increased Summons cost was to fund the Council Tax establishment being

increased by two members of staff or just intended as a temporary measure, the law doesn’t

permit householders caught-out with costs to meet the expenditure for administrating council

tax.

It has been identified in two cases that inflating costs has been done unlawfully and for

invalid reasons. The first, detailed in my 18 September letter, served simply to generate

income to plug a hole in the council’s budget and in this correspondence, to fund additional

staff employed in the council tax department.

It should be noted that at no point has there been a reduction in the summons costs imposed

on residents. This charge has only ever increased which would mean (in theory) that at no

point had the council taken any measures to streamline operations and reduce costs the

authority incurred. This seems unlikely given the increasing trend for councils to share

resources, outsource services and take advantage of efficiencies which new technology

brings.

I will continue with how NELC revealed in a Cabinet document that it intended to raise

additional income of £38,000 a year, largely by increasing the NNDR (Business rates)

summons by 200% with the intention of incentivising prompt payment.

Page 12: LGO Complaint – Supporting Document #8

Evidence 20 September 2012 – LGO Complaint, Supporting Document #8

11

20 September 2012

This letter substantiates my allegations that NELC determines, independently from the court,

the level of costs it charges its residents. Details also demonstrate that the authority seems not

to have any understanding that court costs should be decided and awarded by the courts.

Additional £38,000 per annum cost income

CABINET

DATE

REPORT OF

SUBJECT

FINANCIAL IMPLICATIONS

SUMMARY

6th April 2001

Director of Finance

Review of Recovery Costs

Potential additional income of

£38,000 per annum or improved

cashflow to the Authority

To review costs charged to

debtors in respect of recovery of

Council Tax and Non-Domestic

rates

RECOMMENDATIONS:

a) It is recommended that Committee decide to increase costs in

accordance with the proposal put forward.

The evidence seems now to be mounting that the council is pulling the strings of the

Magistrates' court and dictating the level of costs the court awards the council for liability

order applications.

The court has to be satisfied that these costs are reasonably incurred by the authority. The

reality is though, that the council decides when and by how much they are increased and a

letter sent to the court to inform it of the changes.

From information obtained, there is no evidence that the court takes any part in determining

the level of these costs the council passes on to the council taxpayer.

Another Cabinet document “Minutes of Cabinet meeting 6 April 2001” which appears

unavailable on NELC's website, reveals at item reference "CAB.349" that the decision to

Page 13: LGO Complaint – Supporting Document #8

Evidence 20 September 2012 – LGO Complaint, Supporting Document #8

12

increase costs awarded by the Magistrates' court for Council Tax and Non-Domestic Rates

was not the courts but the Cabinet Committee's.

CAB.349

REVIEW OF RECOVERY COSTS

Cabinet considered a report from the Director of Finance proposing a review of

costs charged to debtors in respect of recovery of Council Tax and Non-Domestic

Rates.

KB asked for clarification of paragraph 4 of the report regarding Liability Order

increases. AE responded that the amount charged for a Liability Order for both

Council Tax debts and Non-Domestic Rates would increase from £32.50 to £35.

The Summons cost for Non-Domestic Rates would rise from £10 to £30.

Recommended to Cabinet Committee

That approval be given to increase costs in accordance with the proposal put

forward in the report now submitted.

This is evidence that North East Lincolnshire council make decisions independently of the

Magistrates' court and approve its own proposals to increase costs. Having no apparent need

to consult with the court, the council is effectively given a free rein to increase these fees

subject to its own internal approval and without providing any proof that its incurred costs

have increased.

These fees are increased by the council as an easy option whenever it needs to generate

additional income. On this occasion the increase was intended to raise additional income of

£38,000 a year and was detailed in the “Cabinet meeting 6 April 2001” document.

Blatant disregard for legislation in the Council Tax Administration Regulations is the

recurring theme here too. The increase had been proposed and approved by the council with

no supporting evidence that any increased costs had been incurred.

There was however, an added disturbing twist for the motive behind increasing the summons

cost of the Non-Domestic Rates by 200% in addition to the extra for a liability order.

The rise in the business rates penalty wasn’t to mirror a 200% increase in incurred recovery

costs. This hike was purely a way of encouraging prompt payment.

Processes for Council Tax and Non-Domestic Rates Liability Order applications are identical,

so proving a difference in administration costs could be tricky if the court required it to do so.

However, as the council are left to their own devices, it is unlikely the Magistrates' court

would have asked the authority for any justification.

Page 14: LGO Complaint – Supporting Document #8

Evidence 20 September 2012 Supporting Document #8

13

The council had unlawfully manipulated the summons costs of Non-Domestic Rates to a level

three times that for Council Tax, even though the processes for Liability Order applications

are identical.

It states at item 5 of the 6 April Cabinet document:

5. The decision to charge more in respect of Non-Domestic Rates is one which other

local authorities are taking in increasing numbers. (There are two in this region

currently, Bradford and Sheffield.) The reasoning behind this is that it is believed that

some businesses deliberately delay payment of Rates as the penalty for late payment

is so small in comparison to the amount that might be owed. The extra cost is seen as

a way of encouraging prompt payment.

The cost of issuing a summons should only take into account the administration involved and

not a “deterrent” element, as there is nothing in the legislation to support an increase in costs

on this basis.

It may well have been an effective measure for improving cash flow, but there can be no

doubt that exploiting costs this way is entirely criminal.

In future correspondence I will be deciphering, reading between the lines or interpreting the

various items of cryptic information that North East Lincolnshire council has reluctantly

supplied with regards its breakdown of costs.

Page 15: LGO Complaint – Supporting Document #8

Evidence 21 September 2012 – LGO Complaint, Supporting Document #8

14

21 September 2012

North East Lincolnshire council claim the annual figure, relating to all activity associated with

recovery, is around £1.13 million. However, this figure includes no breakdown other than

how much of this money is attributable to the Council tax department, Control & Monitoring

and Debt Collection.

The council says its expenditure exceeds monies received from costs revenue. This would

depend on your perspective, i.e. whether you considered costs, solely in relation to recovery,

or, for activities more general to Council Tax Administration.

Based on an average of the last full three years data obtained, 12,644 householders incur

summons costs each year. It would require each of those incurring this to pay around £90 to

cover the £1.13 million the council claims it incurs.

If their calculations had any basis in reality in terms of actual costs, it would mean they were

out of pocket to the tune of £20 per liability order application – its single summons fee is £70.

There would be a shortfall of over £246,000 annually.

Under the Council Tax Regulations, the law allows the authority to recover costs it incurs by

charging the alleged debtor. According to figures quoted by the council, it could lawfully

increase this charge further and recover the £0.25 million shortfall.

From what I’ve just said, it appears I’m arguing in support of the council’s costs. I’m not; this

just makes the next point I want to make easier to explain.

Which is:

There would need to be a good reason for the council electing not to recover the alleged full

costs. It is likely council officers, sense, to what level fees can be hiked without having to

provide a breakdown of administrative costs to the court.

Keeping costs below the court’s radar could be regarded as the safe option and avoid

unwanted attention and scrutiny. Alternatively, pushing the limits may well require that the

council provide supporting evidence of incurred administration costs, which could be difficult

to prove.

If the authority is willing to incur annual losses of £0.25 million which could be lawfully

reclaimed through the summons penalty, then the £1.13 million quoted by the council must

fall under suspicion as to whether this is a credible figure.

Before analysing what appears to be the council’s exaggerated claim for costs, some

perspective can be gained from drawing a simple comparison between the council’s costs for

Page 16: LGO Complaint – Supporting Document #8

Evidence 21 September 2012 Supporting Document #8

15

issuing summonses and a private firm providing a related service.

The council claims that it doesn’t break even by charging £70 for each summons. The figure

it would need to impose on householders to cover its alleged costs would be an estimated £90

according to data obtained.

Consider the fees a private firm of bailiffs are lawfully entitled to charge an alleged debtor. A

bailiff making an initial visit to a debtor’s home, with a view to levying distress, would be

permitted to charge a fee of £24.50. Contrast this with the estimated £90 that the council

would need to charge if it were to meet incurred cost for issuing a summons.

The figure is 267% higher than the bailiff's charge, which, if not the phantom kind, involves a

dedicated visit in person to the debtor’s home. On the other hand, the council’s involvement is

only administrative. Its operation being part of a bulk procedure in which thousands of

summonses will all be processed at one time by its automated system.

It should raise alarm bells when private companies charge at comparatively much lower levels

than the council, especially when these fees cover bailiff's and office staff's wages and

additionally keep company directors etc, in the millions to which they have become

accustomed.

It is inconceivable that £1.13 million is incurred specifically as a consequence of work

attributable to issuing the summons. This would mostly be incurred by the council in any

event. If the authority could prove otherwise, why would it not get back the full expenditure it

claims to spend?

The council has stated that:

The costs raised are to cover the cost of COUNCIL TAX COLLECTION and recovery.

So it seems the council is unlawfully financing COUNCIL TAX COLLECTION and recovery

operations with money it charges residents in respect of the summons. Or, at least, aiming to

recover a large proportion of the overheads needed to run the council tax section at the

expense of residents caught-out with these penalties.

This appears to extend to expenditure which is not specifically dedicated to recovery work.

The data below was provided by the council and is claimed to be its annual budget for all

activity associated with recovery of Council Tax and Business rates. It amounts to around

£1.13 million.

Page 17: LGO Complaint – Supporting Document #8

Evidence 21 September 2012 – LGO Complaint, Supporting Document #8

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2011/12 REVENUES BUDGET (debt recovery)

CONTROL & MONITORING

Total revenue expenditure budget – £507,000

£ recharged income – £0

Percentage recovery work – 20%

Cost attributable CT recovery – £101,400

DEBT COLLECTION

Total revenue expenditure budget – £738,500

£ recharged income – (£121,800)*

Percentage recovery work – 100%

Cost attributable CT recovery – £616,700

COUNCIL TAX

Total revenue expenditure budget – £826,900

£ recharged income – £0

Percentage recovery work – 50%

Cost attributable CT recovery – £413,450

TOTAL – £1,131,550

*cost of sundry debt collection recharged to

other directorates

It is not obvious how the costs are linked with applications for liability orders. What could be

an arbitrary amount for recovery work is taken from the total expenditure of each category,

giving a total cost attributable to Council Tax recovery. If the data is supposed to function as a

breakdown and justification of reasonable costs incurred, the absence of detail renders it

entirely useless.

The vast sums involved do however reinforce the assertion that the council considers, at least

costs for administering Council Tax, to be valid expenditure for recovery, and to be largely

funded by costs charged to the council taxpayer. This will be more closely looked at and

details sent to you shortly.

Page 18: LGO Complaint – Supporting Document #8

Evidence 24 September 2012 – LGO Complaint, Supporting Document #8

17

24 September 2012

Continuing the theme of council’s costs allegedly incurred in the application process for

obtaining liability orders, I’ll begin by putting the number of householders affected by these

charges in perspective.

After exempt accounts are removed, for example, those in receipt of full council tax benefit,

the number incurring summons costs is in excess of a quarter of all bills. This has to be

profiteering, when these imposed costs impinge on such a high proportion of business rates

and council taxpayers.

A statement made by the council increases doubts that the Revenues Budget figures supplied

(Ref: My 21 September letter) do not specifically relate to costs which have been reasonably

incurred by the authority in connection with the application.

It stated that:

The figure £738,500, listed under "DEBT COLLECTION", represents the cost of running the

recovery service and is the total revenue expenditure budget associated with the debt

recovery team for 2011/12.

This means the council is inappropriately attempting to reclaim the overheads of an entire

department with proceeds from summons costs imposed on the alleged debtor. Job

descriptions, which will be looked at in a future correspondence, reveal that recovery team

staff, do not solely dedicated their services to activities attributable to the application for

liability orders.

In a more brief account given by the council’s Chief Executive about what made up the costs,

he provided the following:

The summons penalty costs were increased to £70 in April 2011 an increase of 23%, and are

now inclusive of obtaining a liability order. This increase is in line with national averages for

unitary authorities, which according to the chartered institute of public finance and accountancy

(CIPFA) is £78. This fee is used in order to cover the following costs:

• the cost for the use of the court

• the wages of the staff employed to collect Council Tax and Business Rates

• ICT costs

• postage

Bearing in mind the additional costs of chasing late payment of council tax the amount of

summons penalty costs remain reasonable when compared with the national average and our

neighbouring council's of Hull and East Riding who charge £80.

Page 19: LGO Complaint – Supporting Document #8

Evidence 24 September 2012 – LGO Complaint, Supporting Document #8

18

The above statement further confirms that the setting of fees is not based on actual costs. In

this instance the Chief Executive is admitting they are based on what other authorities charge.

He also admits to including costs for obtaining the liability order in with the summons

penalty. Something which is not permissible and covered in more detail in my 18 September

letter.

His reference to staff wages in the collection of Council Tax and Business rates adds weight

to allegations that the council aims to unlawfully cover the entire cost of these operations with

proceeds from penalties.

The council elaborated on the CEO’s statement in a correspondence to the Information

Commissioner:

North East Lincolnshire Council have not supplied the Magistrates Court with a `breakdown' of

the increased summons costs. We do not hold a breakdown for the calculation of the £70 fee, as

it was based on comparisons with the fees charged by neighbouring authorities (including Hull

City Council and East Riding of Yorkshire Council). The figure of £70 was then compared against

national averages, and as previously identified checked to ensure that the monies raised from

costs would not be greater than the cost of the service.

It also added in a later correspondence:

As the summons costs are based on an average figure which is not greater than the cost of the

service, North East Lincolnshire Council do not therefore hold a breakdown of the composition of

the fee.

From the consistency of the councils statements it is evident that costs over and above those

reasonably incurred are being fraudulently obtained and those defrauded are subsidising a

substantial proportion of the authority’s council tax and business rates administration costs.

The council is legally bound by laws governing administration and enforcement of council

tax. It cannot lawfully apply some juvenile logic that because other authorities have got away

with it, it too should be allowed to follow suit by setting its costs the same. Neither can it

circumvent legislation by seeking agreement of its members to hike fees, as this quote

testifies:

The decision to increase the summons charge and make no subsequent charge for a liability

order was agreed by members following public consultation in relation to the budget proposals.

Page 20: LGO Complaint – Supporting Document #8

Evidence 24 September 2012 Supporting Document #8

19

The council has attempted to back-up its inappropriate decision to base the summons penalty

on neighbouring authorities, after seeking member’s agreement to do this as a way of

plugging a hole in its finances.

It has justified this by stating checks are made “to ensure that the monies raised from costs

would not be greater than the cost of the service.” However, “the cost of the service” is

something entirely different to “costs reasonably incurred” by the authority, so is

inappropriate criteria for setting the level of the summons fee, as these correspondence

confirm.

Page 21: LGO Complaint – Supporting Document #8

Evidence 25 September 2012 – LGO Complaint, Supporting Document #8

20

25 September 2012

Still on the council’s costs, here the focus will be on employment expenditure and considering

if salaries of certain staff (whether part or in full) can justifiably be included in an assessment

for incurred costs which are passed on to the council taxpayer. Or, would they be considered

normal employment costs, and be incurred regardless of the recovery activity.

In relation to these costs, it is likely the departments and staff employed to run them would

exist within the council, regardless of the level of recovery work undertaken. It should be

emphasised that initiating the production of reminders, threatening letters and summonses, all

exploit computer technology. They are automated processes, and so the costs incurred do not

increase proportionally with corresponding additional income generated as a result of a higher

production of summonses.

The authority has identified which of its staff may at some point be involved in the

preparation and issuing of the summons, accompanied with the salary range of those

positions. It must be stressed however, that the list includes all positions which ‘CAN’ be

involved, though not all named posts are involved every month.

Documents detailing the job descriptions for all these posts were also supplied.

It should be noted that none of the positions have been created specifically for producing and

issuing summonses and all of the posts identified would exist within the authority regardless.

For that reason it could be interpreted from the council tax regulations that “costs reasonably

incurred” should only relate to costs specific to the claim being made and not extend to

include those employment costs that would be incurred in any event.

Job Title & Salary band

Senior Debt Recovery Officer

Systems & Reconciliations Manager

Court/Enforcement Manager

Systems & Development Officer

Debt Recovery Officer

Business Support Officer

Debt Recovery Assistant

£25k to £29,999

£25k to £29,999

£20k to £24,999

£20k to £24,999

£15k to £19,999

£15k to £19,999

£10k to £14,999

Page 22: LGO Complaint – Supporting Document #8

Evidence 25 September 2012 Supporting Document #8

21

The council is unable to proportion how much of these employment costs are attributable to

the preparation and issuing of the summons as it does not record the allocation of employee

hours to that level of detail.

However, job descriptions going into comprehensive detail, indicate that the allocation of

employee hours would be a tiny proportion of those the council claim to be attributable.

Presuppose all posts identified, existed solely for the purpose of producing and issuing

summons, and 100% of employee hours were dedicated to this.

Even if the total employment costs were factored into the calculation using the maximum

salary for each band, this would amount to less than 15% of the total £1.13 million total

annual budget. Of course the reality is, the actual figure will be a tiny fraction of this.

A broad range of duties are listed in the job descriptions, including (in particular enforcement

and recovery posts) activities associated with different aspects of debt recovery. Many of the

activities fall outside the description of what the Council Tax regulations allow as recoverable

costs from householders incurring the summons penalty.

Examples are detailed in the job descriptions of the posts for Debt Recovery Assistant, Debt

Recovery Officer, Senior Debt Recovery Officer and Court Enforcement Manager.

The costs incurred as a consequence of the following duties, fall outside what the law allows

as recoverable by way of the summons charge. The list is not exhaustive, but all activities are

described in one or more of these job descriptions.

� Organise and present cases at the Magistrate’s Court and County Court.

� Dealing with the effective recovery of Sundry debts and Benefit overpayments.

� Represent the Council in County Court recovery of sundry debt and benefit overpayments.

� Process attachments of earnings and benefits.

� Attendance at Court Committal Hearings.

� Making payment arrangements by telephone with arrears cases.

� Preparation of evidence for Court Hearings

� Providing information to bailiffs and agents

� Assist with mailings of local taxation bills, reminders

� Contact with customers for payment arrangements.

Page 23: LGO Complaint – Supporting Document #8

Evidence 25 September 2012 – LGO Complaint, Supporting Document #8

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� Contact with bailiffs by telephone and letter for updating of records.

� Attending Magistrate Court for liability order hearings to interview members of the public in

order to assess repayment of the debt and give appropriate advice.

� Monitor numerous debt recovery reports including Attachment of Earnings, Attachment of

Benefits and Special Arrangements.

� Process sundry debt recovery run ensuring all letters are issued correctly.

� Dealing with customers’ bankruptcy and liquidation of companies.

� Update and maintain manual and computer record systems to include bailiff website.

� Operate customer tracing procedures using in house and external systems.

� Advising bailiffs on appropriate course of action.

� Manage the process for externalisation of debt recovery work (for example to Bailiffs and

collection agencies) in accordance with Council policy.

� Manage and maintain a high level of local and national key performance indicators for

example letter response times, telephone response and clearance of debt.

� Process complex and difficult cases and respond to complaints, MP and Member enquiries and

Local Government Ombudsman complaints.

� Manage the process for bankruptcy, liquidation and related matters.

� Manage implementation of revised working practices e.g. Code of Practice for enforcement of

debt.

� Maintain external Bailiff System to ensure the information they hold is up to date.

� Advise other Bailiff/collection agencies of any changes to debt.

� Managing the Recovery of extremely sensitive debt, which impacts on vulnerable people.

� Respond to complex and difficult complaints.

This is almost certainly a revenue scam. The true costs incurred by the authority are clearly a

fraction of those dishonestly being claimed through the court. It is also clear North East Lincs

residents charged with these costs, are being exploited by the Magistrates’ court and council’s

joint heist operation.

Page 24: LGO Complaint – Supporting Document #8

Evidence 26 September 2012 – LGO Complaint, Supporting Document #8

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26 September 2012

The attention here turns to a pretty much indisputable element of incurred costs. With almost

100% certainty, payment the authority makes to the Magistrates’ court for the use of its

facilities can be justified. However, it’s uncertain if this expense relates to the summons, or

costs traditionally associated with obtaining the liability order.

As was detailed in my letters of September 17 and 18, the council has made the liability order

obsolete and front loaded all cost to the summons. The question, on a point of law, is whether

costs specifically incurred by the council for obtaining the liability order are charged to the

debtor as summons costs. If so, since front loading these charges, NELC will have been in

breach of Regulation 34 of the Council Tax (Administration and Enforcement) Regulations

1992.

Application for liability order

34.–(5) If, after a summons has been issued in accordance with paragraph (2) but before the

application is heard, there is paid or tendered to the authority an amount equal to the aggregate of—

(a) the sum specified in the summons as the sum outstanding or so much of it as remains

outstanding (as the case may be); and

(b) a sum of an amount equal to the costs reasonably incurred by the authority in connection

with the application up to the time of the payment or tender,

the authority shall accept the amount and the application shall not be proceeded with.

(6) The court shall make the order if it is satisfied that the sum has become payable by the defendant

and has not been paid.

(7) An order made pursuant to paragraph (6) shall be made in respect of an amount equal to the

aggregate of—

(a) the sum payable, and

(b) a sum of an amount equal to the costs reasonably incurred by the applicant in obtaining the

order.

Historical records of changes in the composition of the summons and liability order costs,

provides indisputable evidence that costs specifically for obtaining liability orders are now

charged to the resident at the summons. This will be covered further separately, but for now I

want to consider, where in the recovery process, payments to the court are incurred, but more

importantly, where they should be incurred.

Page 25: LGO Complaint – Supporting Document #8

Evidence 26 September 2012 – LGO Complaint, Supporting Document #8

24

The total cost incurred with respect payment to Her Majesty’s Court Service is £3 per

summons (liability order application). With reference to the council tax regulations (see

above), there is some ambiguity as to whether this is recoverable under regulation 34(5)(b),

i.e. incurred in connection with the summons or for additional costs incurred in obtaining the

order, (7)(b).

You would suppose logically that payment made to the Magistrates’ court for the use of its

facilities would be specifically costs incurred in obtaining the order. However, the authority is

billed for each liability order application as opposed to the number granted by the court.

In theory then, this cost should be recoverable through the summons charge. However, it is

probably an arbitrary way for the court to apply its charges; one of convenience more than

anything else. There is however, a greater financial benefit for Her Majesty’s Court Service,

as the orders applied for are greater in number than the orders it grants.

As the authority is billed on application, technically the cost should be charged to the account

holder in accordance with regulation 34(5)(b) at the summons stage. Though, a cursory look

at the court’s practical involvement tells us that payment would in reality, cover both an

application element and the court hearing – including the hire of part of the court’s premises

to do its deals.

Regardless of which of these charges this cost is incurred, because North East Lincolnshire

council no longer distinguishes between them, any charge attributable to the liability order,

either theoretical or practical, will now be front loaded to the summons penalty.

A request for a breakdown of other miscellaneous costs was put to the council and included

IT, printing, consumables, letter preperation etc. None of these costs could be itemised

because it either didn’t hold information in so much detail, or costs could not be specifically

attributed to summons preparation alone because they were consolidated with shared

activities. All of which begs the question of how the council’s £1.13 million incurred costs

have been possible to calculate.

With regards the annual costs of software licensing, acquisition and/or leasing, the council

were unable to breakdown the costs in relation to those attributable specifically and

exclusively to the preparation and printing of the summonses.

Although it could not breakdown these costs, it stated the software used is designed for the

Recovery of Council Tax as a whole, and cannot be specifically allocated to the individual

element of summons preparation.

Similarly the council were unable to breakdown the cost of computer time attributable

specifically and exclusively to sorting data, generating lists, and printing forms, as it did not

hold the information to that level of detail.

Page 26: LGO Complaint – Supporting Document #8

Evidence 26 September 2012 Supporting Document #8

25

For the same reason, neither could it account for the costs associated with running the print,

folding, and insertion equipment. However, it stated that the printing of summons is done

using a communal printer, and this, along with the activities for folding and insertion are

included, but not specifically identified as part of the overall cost of activities supporting the

Income and Payments section.

In the same way, costs for consumables including paper ink envelopes etc are not held

specifically in relation to the preparation of summons. This is because the printer is used for

daily, weekly and monthly documents for Income and Payments. Also, envelopes used for the

summons are bulk ordered for the department as a whole, which means specific cost in

relation to the preparation of summons is not held.

In contrast to those costs which cannot be accounted for, those for posting the summons are

not specifically recorded.

It seems ironic that the cost most directly linked with the summons (after that paid to the

court) is not specifically recorded for budget purposes.

Page 27: LGO Complaint – Supporting Document #8

Evidence 27 September 2012 – LGO Complaint, Supporting Document #8

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27 September 2012

I wrote previously about how historical levels of the summons and liability order provided

evidence that costs for obtaining liability orders have been front loaded and are now being

charged to residents at the summons stage of recovery.

What really gives the game away is not how much they’ve increased, but the weight given to

the summons in relation to the liability order cost. This has shifted from being the lesser

amount to the higher until ultimately the entire cost. It doesn’t take a genius to understand

why they’ve been manipulated this way, but it does take away any credibility that they have

any basis in reality.

I don’t see anything preventing an authority from electing not to charge for a liability order,

but it would be unlawful if it were to specifically charge costs for a liability order at the

summons stage.

The following table charts the changes of costs raised per summons and liability order over

the period from 2000 to date. Note these are only in relation to council tax, NNDR are not

included.

Costs Raised Per Summons and Liability Order

2000 / 2001 Summons £10.00 Liability Order £32.50

2006 / 2007

Summons £32.00 Liability Order £25.00

2001 / 2002 Summons £10.00 Liability Order £35.00

2007 / 2008

Summons £32.00 Liability Order £25.00

2002 / 2003 Summons £15.00 Liability Order £35.00

2008 / 2009

Summons £32.00 Liability Order £25.00

2003 / 2004 Summons £15.00 Liability Order £35.00

2009 / 2010

Summons £32.00 Liability Order £25.00

2004 / 2005 Summons £30.00 Liability Order £25.00

2010 / 2011

Summons £32.00 Liability Order £25.00

2005 / 2006 Summons £30.00 Liability Order £25.00

2011 / 2012

Summons £70.00 Liability Order £0.00

Up until 2011, 44% of the overall costs were charged to the debtor for obtaining a liability

order.

Presently this is zero, so 100% is charged to the debtor for issuing a summons. The maneuver

also saw the summons go up by almost 120%.

Page 28: LGO Complaint – Supporting Document #8

Evidence 27 September 2012 Supporting Document #8

27

The radical change to the charging structure makes it a very real possibility that the law has

been broken because householders charged for a summons are automatically incurring

liability order costs whether an order is made against them or not.

The above figures supplied by NELC reveal that the authority has taken steps to increase

revenue, not only by inflating costs, but by giving increased weight to the summons in

relation to the overall costs. More importantly, they bring into question how the Magistrates'

court, which is required to agree the level of costs, has been able to authorise these, with any

credibility.

In 2001, liability order costs represented 78% of the overall costs, but decreased in 2002 to

70%.

In 2004 the scales tipped, and for the first time, more weight was given the summons penalty

and the liability order costs were 45% of the overall costs.

These went largely unchanged until 2011 when the most radical shift in the proportion of

costs occurred. The council, for whatever reason, regarded costs for obtaining a liability order

were nil, which in contrast were deemed to be almost 80% of the overall costs in 2001. Now

all these have been front loaded and are attributable to issuing the summons.

There have been five increases, and/or composition changes to the summons and liability

order costs over this period. However, references to only two of these (2011 and 2002) have

apparently been made publicly available through the council’s website.

Although some Cabinet documents are unavailable publicly, an additional one (2001) has

been obtained. This one, along with the two available on its website are detailed in my

September 18, 19 and 20 correspondence. In relation to the 2004 and 06 changes in the costs,

no information is available and no cabinet documents are held at the council.

In all examples where there is documentation referencing the changes, it is clear that the hike

in costs were not implemented as a consequence of increased costs incurred by the authority

for issuing the summons.

Two noticeable observations can be made regarding the historical trend to gradually shift

costs to the summons. One is that there could have been no justification for this, regardless of

whether or not it was authorised by the Magistrates’ court, and the other of course is that

increased revenue would be generated.

A quick comparison of the arbitrary way these costs are split will not solve the conundrum in

terms of how they’re established, but it will demonstrate that the split between the two

penalties is chosen randomly, and to best profit the council.

Page 29: LGO Complaint – Supporting Document #8

Evidence 27 September 2012 – LGO Complaint, Supporting Document #8

28

Establishing Costs – A ratio Perspective

22% of costs made up those imposed for the summons charge in 2001. Based on the then

costs ratio and today’s figures, the summons should be around £15, based on overall costs of

£70.

By imposing £70 for the summons, and using the ratio it favoured in loading costs in 2001,

householders are being over charged £55 by the authority. This assumes costs are in fact £70

per summons. This though, is being proved will be nowhere near.

Of course the costs for the applications process will not be anywhere near those being claimed

by the council. The example serves mainly to illustrate how the authority has been

manipulating figures to suit itself.

Even if costs incurred by the council, up until issuing the summons exceeded the £70 charge,

the council has specifically stated that:

Costs collected also cover monies paid to Her Majesty's Court Service for the use of their

facilities.

Therefore, if not all, at least an element of these costs paid to HMCTS would be in respect to

obtaining the liability order.

So, regardless of whether or not the fee covers all incurred costs to the council, a

disproportionate amount is collected in penalties from debtors who settle their accounts prior

to possible court action.

Although there may be nothing to require that they do charge for the Liability Order, the

council has now and historically – to varying degrees – given sufficient evidence that a

distinction exists.

Page 30: LGO Complaint – Supporting Document #8

Evidence 28 September 2012 – LGO Complaint, Supporting Document #8

29

28 September 2012

I think it’s worth taking a look at the way Liability Order hearings are conducted and the role

this plays in the obvious profiteering that goes on.

As you know these are typically scheduled to take place several times a year. What seems odd

to me about the arrangement – and an indication that these are administrative rather than

judicial affairs – is there being no requirement for the defendant to attend court. The ones who

do, being typically low in number are met by council employees who are deployed at the

court to intervene with proceedings.

Council’s court enforcement staff – having no connection with the court – will be in

attendance to circumvent the judicial process. A room is reserved at court where council reps

fashion their bogus hearing. This is a violation of due-process. Defendants who think they are

to appear before Magistrates as stated on their summons have been duped. For those

unfamiliar with these hearings, they may appear regular so would go along with the

procedure.

Council staff will be either seeking payment plans or attempting to resolve mistakes made in

their applications. However, those obstructed from presenting their cases before Magistrates,

get no dispensation; costs would still stand and the Liability Orders obtained.

The council’s intrusion also doubles to limit time taken by Magistrates. Several weeks would

be needed to process a single batch, should all defendants turn up knowing their rights. If

everyone appeared, the court would still be in session when the subsequent batch was

conveyored in. The council’s intervention clearly makes a complete mockery of the judicial

process.

Gains generated through these "conveyor belt" style operations are enormous. It should raise

alarm bells when revenue in respect of an hour or so's visit to the Magistrates’ court can mean

the authority walks away with £0.21 million costs revenue if it achieves 3,000 complaints on

its list to the court.

Having figures presented like this, makes it really hit home that the authority must benefit to a

far greater extent from income generated than it incurs obtaining the orders. £1.13 million is

therefore unrealistic as an amount the council incurs annually for sending out summonses.

For each liability order the council applies for, £3 is paid to HMCTS. This is the only amount

that the council has, or is able to justify. The authority has stated this is included in the ‘Debt

Collection’ category of its debt recovery budget. That leaves the remaining £1.09 million for

sending out reminders and summonses and will cover letter printing, envelope enclosing,

mailing costs and because of automation, little else.

Page 31: LGO Complaint – Supporting Document #8

Evidence 27 September 2012 – LGO Complaint, Supporting Document #8

30

The council tax regulations only allow reasonable costs to include those in connection with

court applications. Therefore costs they might incur afterwards can not lawfully be charged to

the debtor. For example if the authority incurs costs in relation to debt collecting operations, it

would be unlawful to include that expenditure in the penalty imposed on the debtor.

It would be unlawful too for the council to cover its costs for sending out reminder and threat

letters. Doing this would mean defendants subsidising late payers who in the majority would

not incur costs.

To reinforce the assertion that only costs specifically connected with recovery can be

reclaimed, the Council tax practice note number 9 states on page 8:

3.18...The order will include the costs reasonably incurred by the authority in securing the

order. Whilst it is likely that authorities will have discussed a scale of fees 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.

You could say this would mean costs which are not specifically attributable to recovery, like

council tax administration in general, cannot be lumped in with the calculation and reclaimed

by way of costs.

The council’s debt recovery budget states under ‘Control & Monitoring’ that 20% (£101,400)

of the total £507,000 budget listed in that category is attributable to council tax recovery.

The concern is that an element of these costs may relate to monitoring of liability order

applications. If so it is likely the costs claimed are being made under false pretences. I will be

detailing this in a future correspondence.

Page 32: LGO Complaint – Supporting Document #8

Evidence 1 October 2012 – LGO Complaint, Supporting Document #8

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1 October 2012

This letter will outline the concerns raised in my 28 September correspondence relating to

Control & Monitoring. As mentioned, if any element of these costs is claimed with regards

monitoring liability order applications, it will without doubt be done under false pretences.

It is a legal requirement for the council’s collection team to check the accuracy of all accounts

before processing them to the enforcement stage. There is overwhelming evidence that the

council does not meet this obligation. Data supplied by the council which relates to liability

orders covering a five year period provides evidence that neither the local authority nor

Magistrates’ court are monitoring liability order applications.

– 6,580 Liability Orders were issued for an initial debt of less than £100.

– For a debt less than £25 the number issued was 1,387. For outstanding balances under

£15 the figure was 544, and 45 accounted for debts less than £5.

– 3 Liability Orders were even issued for an initial debt of only 1 penny.

Over this period, a total 3,528 Liability Orders were issued for initial debt of £50 or less. The

authority has stated that the council's collection team checks the accuracy of all accounts

before passing them to the enforcement stage and accounts are only progressed to

enforcement for amounts over £50.

Against the council’s own guidelines, 3,528 householders incurred court penalties that

shouldn’t have. They would then be subjected to having their possessions seized by bailiffs

and incurring further extortionate fees.

The financial benefit for letting these cases progress to enforcement is obvious. The court is

paid for each application the council makes. It therefore makes financial sense for it to turn a

blind eye and authorise applications and grant the orders.

Whether or not orders are sought purposely to generate income is a matter in itself for

investigation, though what is relevant here is the negligence of both the council and court staff

who review these cases. The point being that the annual £101,400 attributable to ‘Control &

Monitoring’ will be costs claimed under false pretences as there clearly is no effective

monitoring of liability order applications.

The case between "Regina v. Brentford Justices, Ex parte Catlin" made a point that "a

decision by magistrates whether to issue a summons pursuant to information laid, involves the

exercise of a judicial function, and is not merely administrative."

Page 33: LGO Complaint – Supporting Document #8

Evidence 1 October 2012 – LGO Complaint, Supporting Document #8

32

Lord Chief Justice, Lord Widgery stated that:

....before a summons or warrant is issued the information must be laid before a

magistrate and he must go through the judicial exercise of deciding whether a summons

or warrant ought to be issued or not. If a magistrate authorises the issue of a summons

without having applied his mind to the information then he is guilty of dereliction of duty

and if in any particular justices' clerk's office a practice goes on of summonses being

issued without information being laid before the magistrate at all, then a very serious

instance of maladministration arises which should have the attention of the Authorities

without delay....

There clearly then, exists in these liability order applications, at least a dereliction of duty,

when so many are granted for insignificant amounts. Many of which would likely have

originated from administration errors or oversight rather than non-payment. Whatever the

cause, these small debts certainly don't warrant being grossly inflated by council's court costs

and bailiff fees.

Defective Summons Documents

More evidence in this example reinforces the assertion that no Control & Monitoring exists in

the liability order applications.

Having authorisation from the Magistrates’ court, the council’s recovery department sent out

3,361 flawed summonses containing incorrect and out of date information relating to costs for

obtaining a liability order. The orders were for non-payment of either council tax or NNDR,

with all alleged debtors scheduled to attend the same hearing of 2 June 2011.

Of greater concern is the Magistrates’ court had been informed by the council, in writing, that

from 1 April 2011 it would be changing the composition of the costs by increasing the

summons and no longer imposing £25 costs for obtaining the liability order – see September

17 letter.

The Magistrates courts' Legal Adviser is required to review applications which should have

already been checked by the council's recovery staff beforehand. However, this had not

prevented more than 3,000 of the defective summonses being sent out unnoticed to residents,

stating that the council would apply for further costs of £25 if a liability order was granted.

The obvious errors going unnoticed brings into question whether either of these procedures

had even taken place.

Page 34: LGO Complaint – Supporting Document #8

Evidence 1 October 2012 Supporting Document #8

33

Data obtained covering the five year period suggests it unlikely that any monitoring ever takes

place.

A total £182,140 was incurred by 2,602 householders who were liable for the penalties in

connection with a single council tax liability order hearing.

These court costs and any enforcement fees as a result of the recovery should not have been

imposed. Firstly because the paperwork was flawed and secondly, it is unlikely applications

had been checked by the council or reviewed by the court. Or, if they had this was done

negligently.

In connection with enforcement, and as a follow-up to liability orders being issued by the

Grimsby Magistrates’ Court on 2nd June 2011, the council had to re-send 2,207 letters which

were sent out on the 3 June 2011. These documents, like the 3,361 summonses, were

defective. If it was deemed necessary by the council to make corrections to these, then the

summonses should have also been corrected and re-sent.

None of these defective summonses were corrected and re-sent when the council learned they

were defective nor was any compensation made to residents in respect to costs incurred from

this flawed judicial process.

Continued....................

Page 35: LGO Complaint – Supporting Document #8

Evidence 1 October 2012 – LGO Complaint, Supporting Document #8

34

SUMMONS FOR NON-PAYMENT OF COUNCIL TAX

IN THE GRIMSBY AND CLEETHORPES PETTY SESSIONAL DIVISION

Complaint has been made before me, the undersigned Clerk to the Justices, by The Executive Director

Business Services of North East Lincolnshire Council that you, being a person duly subject to and liable

for Council Tax, have not paid the sum(s) set out below:

COUNCIL TAX

SUMMONS COSTS

TOTAL AMOUNT PAYABLE

£ 870.91

£ 70.00

£ 940.91

Note: This figure includes costs imposed

prematurely. The council tax regulations

clearly provide for costs to be awarded

incrementally. Liability order costs have

been imposed before obtaining the order.

You are hereby summoned to appear on Thursday 2nd June 2011 at 14:00 hrs. before the Magistrates

sitting at The Magistrate's Court, Victoria Street, Grimsby, to answer the said complaint. If you do not

appear you will be proceeded against as if you had appeared and a Liability Order may be made in your

absence.

Dated 11- MAY-2011 Signed:

Clerk to the Justices

There is no need to attend Court unless you dispute your liability. If you wish to discuss payment and/or your liability please contact North East Lincolnshire Council,

prior to the hearing, and not the Court.

Enquiries may be made by telephone on (01472) 323760 or you may visit the Customer Access Points at

Grimsby or Cleethorpes. If the total amount outstanding as stated above including summons costs is paid

to North East Lincolnshire Council before the date of the hearing, all further proceedings will be stopped.

However, if a Liability Order is granted the Council will apply for further costs of £25.00 being

reasonable costs incurred.

Note: This is an error. The authority changed the composition of the

summons and liability order costs by front loading all charges to the

summons. 3,361 of these documents went unnoticed by the council and

Magistrates’ court.

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Evidence 17 October 2012 – LGO Complaint, Supporting Document #8

35

17 October 2012

I have today paid £437.52 into North East Lincolnshire council’s bank account. This is the

sum outstanding on my 2012-13 council tax liability, settled well before the statutory

instalment arrangement dictates.

An additional £10 has been paid to cover summons costs. £3 to cover Magistrates court fees

and the remainder is NELC’s costs. However, I consider £7 to be an over generous amount to

cover those incurred by the council given they are mass produced documents.

I believe the authority must apply for an award of costs at each court hearing. I therefore

expect any surplus credited to my account upon the Bench awarding the council less than £10

cost.

It is important you let me know in advance of the hearing whether or not the council will be

requesting a liability order for the £60 shortfall of the stated amount payable on its summons.

The document I received today states on it a £70 summons cost payable.

I believe NELC have a policy of only progressing accounts to enforcement for amounts over

£50. The position here is unclear if this relates to the liability order stage or any preceding it.

However, the amount according to NELC is £60 and so will assume no response from the

council will mean I’m required to attend the hearing if I wish to dispute costs.

A request made under the Freedom of Information Act gave North East Lincolnshire Council

an opportunity to supply a breakdown of costs attributable to its recovery operations. It was

unable to do this, only a fraction of the questions were reluctantly answered and only after

attempting to circumvent the request by improperly citing exemptions under the Act.

It seems from the response that North East Lincolnshire Council has breached regulations

34(5)(b) of the Council Tax (Administration and Enforcement) Regulations 1992 which state

that these costs need to have been reasonably incurred by the authority.

The inability demonstrated by North East Lincolnshire Council to determine these costs, is

proof enough that the Magistrates' court will have had no basis to assess the reasonableness of

the authority's claims.

It is therefore inconceivable that North East Lincolnshire Council, or the Magistrates' court

for that matter, can lawfully state on the summons document that a predetermined £70 costs

has been reasonably incurred.

For your reference, the Council tax practice note number 9 states on page 8:

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Evidence 1 October 2012 – LGO Complaint, Supporting Document #8

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3.18...The order will include the costs reasonably incurred by the authority in securing the order.

Whilst it is likely that authorities will have discussed a scale of fees 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.

Regarding my concerns on this matter, I intend to put it to the Magistrates’ court that in light

of the evidence, they do insist that the amount claimed in costs per individual, is no more than

that reasonably incurred by the authority.