Posted by: John Brace | 17 September 2015

Why do councillors get allowances tax-free and YOU end up paying the £10,820.28 tax?

Why do councillors get allowances tax-free and YOU end up paying the £10,820.28 tax?

                                             

In an update to the earlier story Why is there a £17k to £19k discrepancy in allowances and expenses for councillors on Merseyside Fire and Rescue Authority?, Merseyside Fire and Rescue Service have been in touch to explain what’s going on.

Firstly, when Merseyside Fire and Rescue Authority declared that councillors cost (and told the public this at a public meeting) £7k in expenses earlier in the year (it was this public meeting).

This should’ve actually been £14k.

£7k was the amount claimed back by councillors, Merseyside Fire and Rescue Service then paid a further £7k in expenses directly (that should’ve been included in the figures).

With me so far?

No I come to a rather shocking revelation.

The allowances paid to councillors at Merseyside Fire and Rescue Authority are paid tax-free. A Wirral Council councillor has left a comment stating that for Wirral Council, income tax and NI are deducted from councillors’ allowance from the amounts councillors receive.

I’ll try and explain.

I’m self-employed so I have to declare what I earn each year to HMRC [Her Majesty’s Revenue and Customs]. HMRC then tell me how much National Insurance and Income Tax I pay and I pay that out of my gross profits.

However councillors are paid allowances and at MFRA (and presumably other public bodies but not Wirral Council) that pays them the allowance is paying any income tax or National Insurance due on top of that!

It isn’t coming out of their allowances! So everybody else has to pay tax out of their gross pay councillors do not! Who pays for this cosy arrangement? You do through taxes!

The amounts of course for a small authority like Merseyside Fire and Rescue Authority for these beneficial tax arrangements the costs are small (£10,820.28) as it has only eighteen councillors.

However in the annual totals published each year because of the The Local Authorities (Members’ Allowances) (England) Regulations 2003, SI 2003/1021 these amounts are not included. This misleads the public into thinking that councillors cost far less than they actually do cost.

The Wirral Council figures for councillors allowances for 2014/15 were published earlier this year. These figures presumably include income tax/NI, whereas similar figures for the MFRA do not.

In a question I posed to Councillor Adrian Jones earlier this year he stated “however in future the cost of Member’s [councillor’s] taxi journeys undertaken pertinent to these taxi contracts will be published on the Council’s website as soon as practicable after the end of each financial year.”

This response to a FOI request I made, shows the total spend on councillors for taxis from April to December 2014 was £1,829.55.

So over the whole year, that would be an estimated £2,400.

The figures however declared in the official expenses table only come to less than a thousand pounds.

Obviously this means the taxi amounts have once again not been included with the official figures despite Councillor Adrian Jones suggesting that they would.

I exercised my Audit Commission Act 1998, s.15 right this year (as I’m a local government elector in Wirral) to copies of the paperwork to do with expenses.

Wirral was supposed to (as not to do so would be breaking the law) provide them by the end of the inspection period which finished on the 14th August 2015.

This is to allow a reasonable period for any questions to the auditor or any objections to be resolved by the time the accounts have to be closed by 30th September 2015.

I have sadly only received a very small fraction of what I requested.

Merseytravel, Merseyside Fire and Rescue Authority and Merseyside Waste Disposal Authority all managed to provide the information either by the end of the inspection period or shortly after.

Wirral Council has not. It’s now over a month passed the 14th August 2015 and I’m still waiting.

There’s also a right to inspect these councillor expenses, again Wirral Council just states that they are dealing with this under the audit legislation, that the paperwork they have from HR on councillor expenses is  incomplete  therefore I can’t see it yet!!!

I mean seriously! They didn’t mind giving me incomplete paperwork last year (but did mind me pointing out it was incomplete and having to go back and do it properly).

Apparently they’ve spent some money this time on software to black bits out, since the Vincenti incident and the accidental disclosure of ~200 members of staff names, dates of birth, national insurance numbers and pension details to me in a contract it seems that Wirral Council has difficulties in doing this right.

Quite why Merseytravel, Merseyside Fire and Rescue Authority and Merseyside Waste Disposal Authority didn’t have any major difficulties (bearing in mind these are public authorities that from memory have a far smaller budget than Wirral Council), even when one of the documents I requested was an over 800 page £1.2 billion contract with a company to send Merseyside’s rubbish on a train far away and burn it with many redactions scattered through the contract or with a contract with Merseyside Fire and Rescue Authority, that was so big it came on DVD and on paper took up three massive storage boxes (in fact the contract is so large I’ve only been able to publish part of it), I think has to do with the fact that those public authorities have a culture of taking their legal obligations more seriously.

These other public authorities understand a culture of openness and accountability, but Wirral Council can sadly (despite improvements) cling to an insular culture from its past. This culture was in part what led to the events that removed of a previous Labour administration in 2012 and former Leader of the Council Cllr Steve Foulkes.

Wirral Council likes it seems to be downright unusual and not learn from best practice elsewhere how to get better. As detailed above in the question to Councillor Jones, change from practices that shouldn’t happen are promised, but then the changes that have been promised don’t happen.

The public notice for those other authorities (apart from one that didn’t include a name) meant the request went straight to a member of their senior management team.

At Wirral Council that wasn’t the case.

At those other authorities this meant the request got dealt with within or near the timescales as the “instructions came down from on high” .

Fort Perch Rock car park New Brighton 29th June 2015 photo 1

Fort Perch Rock car park New Brighton 29th June 2015 photo 1

I might point out that last year using the same rights under the audit, I published part of a Wirral Council lease with Neptune about car parking in New Brighton that was referred to in the Cabinet decision to U-turn and abandon plans to introduce charges for car parking at Fort Perch Rock.

Wirral Council would seriously try the patience of a saint. Sadly they force me into a position where I have to use arcane legal procedures and involve the external auditor (thus costing Wirral Council more by sadly driving up their external audit costs) to try and get anywhere.

Wirral Council’s Audit and Risk Management Committee meets next week on the 22nd September to discuss the 2014/15 accounts. One of the matters they’ll be discussing formed an earlier story on this blog.

The £6.9 billion Merseyside Pension Fund that Wirral Council manages pays a pension to a close relative of mine so I had better declare that as an interest.

However does anyone have any suggestions as to what I can to ensure Wirral Council does things better?

Or do people already think I’m perfectly capable of answering that one myself?

If you click on any of the buttons below, you’ll be doing me a favour by sharing this article with other people.


Responses

  1. This is as bad as a duck house or moat! Only it happens more regularly than those.

  2. John that is a shocking revelation, that the public believes the cost of councillors be some £800,000 but in reality is at least 10/8 times £800k.

    That puts a new light on a leading councillor’s claim to me that he paid income tax on his allowances. Legerdemain perhaps as yes he does, it being deducted from the gross to arrive at net figures.

    Companies Act regulations on corporations, and WBC is a corporation, dictate that emoluments are declared GROSS in published accounts.Having read the local government allowances legislation, link provided by yourself, it refers to publishing the “payable” amounts which I interpret not as that paid in money to councillors but as with all other corporations that paid to councillors and that paid to HMRC on their behalf-tax and Ni inclusive.

    Some clarification on this point is desperately needed as to

    whether WBC accounts show councillors “allowances” gross

    whether payable in local government regulations demand the true cost of payments to and on behalf of councillors to be published

    At least the WBC transparent declarations would have urged it to point out that the £800k figures it publishes were NET of tax and of NI. Legerdemain on the behalf of a corporation seeking to mislead its electors?

  3. G’day John and Wirralbizz

    Where is Reprahnehpets?

    I have n