Again, let me state for the record that I am not an accountant or lawyer.
From my previous article, here is an extract from the “Statement of Accounts” of Powys County Council for tax year 2013-14:
The amount of these reserves is described on page 22:
Usable Reserves £55,957,000
Unusable Reserves £246,260,000
TOTAL RESERVES £302,217,000
On page 16 under the heading “Budget Summary” that document lists the anticipated take from Council Tax as £60,353,000.
The “Budget” is decided by a full meeting of the Council annually and, as was described previously, is the only account which is circulated to Council Tax payers each year. Stories supplied to the Press also only mention the "Budget”.
That year, Powys Council anticipated problems at the “Budget” meeting:
Tickets for tomorrow’s Powys County Council’s budget meeting at County Hall in Llandrindod Wells will be made available on the day on a first-come-first-served basis. About 30 seats will be available in the main council chamber, while a further 77 will be set up in overflow rooms where proceedings will be broadcast live.
Protestors are expected to descend on County Hall in large numbers for the meeting after proposals including cuts in education and money provided to the Citizens Advice Bureau provoked anger across Mid Wales.
The council’s blueprint for making the savings is expected to be ratified at tomorrow’s meeting and the level of council tax will also be set.
Councillor Barry Thomas, leader of Powys County Council, said: 'This year’s budget has been one of the hardest ever for the council with a significant cut in funding, ever increasing service pressures resulting in the need for a £20 million reduction in spending...'
I find the failure to mention the total reserves of £302,217,000 to be suspicious, to say the least. Although the Powys “Statement of Accounts” fails to define what “Unusable Reserves” are, the nearby Rhondda’s document lets the cat out of the bag (theirs is £100,308,000 incidentally):
These are reserves established as a result of various regulations to ensure costs chargeable to Council Tax are appropriate. They do not represent resources available for the general use of the Council...
So “unusable funds” are set by Regulations. Many of a Councils obligations are set by Acts of Parliament. An Act cannot be repealed by a Regulation. Generally, all Acts are required to be acted upon per the Interpretation Act 1978:
Every Act is a public Act to be judicially noticed as such, unless the contrary is expressly provided by the Act...
I said “generally”. Here is s.21 of the Local Government Act 2003:
(1)The Secretary of State may by regulations make provision about the accounting practices to be followed by a local authority, in particular with respect to the charging of expenditure to a revenue account.
(2)In any enactment to which this subsection applies, reference to proper practices, in relation to accounts of a local authority, is to those accounting practices—
(a)which the authority is required to follow by virtue of any enactment, or
(b)which are contained in a code of practice or other document which is identified for the purposes of this provision by regulations made by the Secretary of State.
(3)In the event of conflict between practices falling within paragraph (a) of subsection (2) and practices falling within paragraph (b) of that subsection, only those falling within paragraph (a) are to be regarded as proper practices.
(4)Subsections (2) and (3) apply to any enactment contained in—
(b)any Act passed after or in the same Session as this Act,
(c)the Local Government and Housing Act 1989 (c. 42),
(d)the Audit Commission Act 1998 (c. 18), and
(e)subordinate legislation (within the meaning of the Interpretation Act 1978 (c. 30)) whenever made...
In other words, here is proof of Mr. Richardson’s thesis:
And after my extensive search, I was shocked at how this international financial accounting structure has already been implemented right under our collective noses...
What is to be done? The perpetrators in local government have, I submit, both a political and a legal price to pay.
In Powys, and I suspect elsewhere, the elected leader of the Council has been economical with the truth by failing to mention a conscious decision not to use a portion of the Reserves to cover the shortfall in his public statements about the Budget.
The revelation that Powys has over £300,000,000 in reserves and is allowing the distress caused by £20,000,000 in cuts to be inflicted on the population would not please many tax payers. They might even wonder why it was necessary to raise £60,000,000 in Council Tax at all. What are “Reserves” for?
The Leader may well have legal problems if he has also failed to comply with statutory obligations to provide services.
The first is that such Council Tax demands have no lawful basis. They amount to “fraud by false representation” contrary to s.3 of the Fraud Act 2006:
Fraud by false representation
(1)A person is in breach of this section if he—
(a)dishonestly makes a false representation, and
(b)intends, by making the representation—
(i)to make a gain for himself or another, or
(ii)to cause loss to another or to expose another to a risk of loss.
(2)A representation is false if—
(a)it is untrue or misleading, and
(b)the person making it knows that it is, or might be, untrue or misleading...
Note the requirement to prove “dishonesty” and that the test includes “or might be, untrue or misleading”.
In other words, the Leader of the Council is at risk of criminal prosecution if an official has misled him as to the Councils statutory obligations.
You may think “they wouldn't do that, would they?" I am researching Powys but nearby Rhondda Cynon Taf Council officials did and were called to account earlier this year by the Court of Queen’s Bench sitting at Swansea:
THE QUEEN on the application of ANGHARAD MORRIS DONNA THOMAS
This is at para.5:
On 8 January 2014 the defendant made a similar decision in relation to the 2014/15 academic year. That decision was challenged by way of judicial review and was declared to be unlawful in R (West) v Rhondda Cynon Taf County Borough Council  ELR 396. The decision was quashed on 23 May 2014. Supperstone J held that the councillors took the decision when they had not been provided with a proper account of the Council's statutory duties nor had the material required to enable them to effect a proper discharge of their statutory duties.
In other words when Councillors are misled by officials their decisions are liable to be quashed by the Courts. Here is the key legal point from the West Judgment:
55. The problem in the present case is that the material report to Cabinet and accompanying documents neither referred to the Council's statutory obligations (with the exception of the public sector equality duty) nor identified, arising from those obligations, the issues to be determined. Apart from the EIA, all that the Cabinet was provided with was a report detailing the results of the consultation exercise. From that report and from the responses, Cabinet members would have read what was said in the responses about the issue of the sufficiency of childcare. However, they were provided with no framework in which to consider and properly assess the issue.
56. I agree with Mr Giffin that once it is accepted that childcare is a relevant issue to be considered then it has to be considered on the correct basis, that is, on the basis of a correct appreciation of the local authority's statutory duties in that respect. That being so, proper regard must be had to the statutory guidance. Public authorities are obliged to ask themselves the right questions and take reasonable steps to acquaint themselves with the relevant information to enable them to answer it correctly (Secretary of State for Education and Science v Thameside Metropolitan Borough Council  AC 1014 at 1065B).
57. In my judgment the Cabinet did not, in substance, have due regard to the relevant statutory need as required by 118 of the 1998 Act, or section 22 of the 2006 Act. Both grounds of challenge are, in my view, made out...
What recompense, besides the satisfaction of seeing some councillors and officials behind bars, is there for the long suffering Council Tax payer? Such behaviour would undoubtedly fit the definition of “maladministration”. There is a statutory remedy for that at s.92 of the Local Government Act 2000:
Payments in cases of maladministration etc.
(1)Where a relevant authority consider—
(a)that action taken by or on behalf of the authority in the exercise of their functions amounts to, or may amount to, maladministration, and
(b)that a person has been, or may have been, adversely affected by that action, the authority may, if they think appropriate, make a payment to, or provide some other benefit for, that person.
(2)Any function which is conferred on the Greater London Authority under this section is to be exercisable by the Mayor of London and the London Assembly acting jointly on behalf of the Authority.
(3)In this section—
“action” includes failure to act,
“relevant authority” has the same meaning as in Part III of this Act.
I submit that “may” in the interpretation of the Act means “must”. See my video on Council Tax for an explanation:
To summarise, and a suggested action plan for anyone who, dare I say it, would like some Council Tax money to be refunded.
- Obtain the “Statement of Accounts” for your Council.
- Obtain the “Budget” document for your council.
- Locate any mention of “Unusable reserves”.
- If that figure exceeds any “cuts” then there are at least grounds to ask your Councillor whether they have been made to services which are required to be provided by Act of Parliament and to check yourself. Existing local pressure groups may well be pleased if you share this information with them.
- If there have been cuts contrary to statutory obligations then they should be brought to the attention of the “Section 151 Officer” because of his responsibility to represent the interests of the taxpayers.
- His report to the Councillors should result in “the Cuts” being corrected by transfer of funds from the reserves.
- Individuals who have been adversely affected by maladministration may well obtain restitution as described above.
If you decide to act along these lines, please keep the British Constitution Group informed of your progress to avoid unnecessary duplication in each county. Because of the increase in our activities since the Spring Conference we may have to limit the assistance which we give to members only.
Read Part 1 of this article.