9. Dadl y Ceidwadwyr Cymreig: Ariannu llywodraeth leol

Part of the debate – Senedd Cymru am 4:51 pm ar 29 Mawrth 2023.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Mike Hedges Mike Hedges Labour 4:51, 29 Mawrth 2023

(Ddim wedi ei gyfieithu)

I am very pleased to see that we have cross-party support for recognising the vital role that local authorities play in delivering public services across Wales and the funding challenges they face.

The rich, and their representatives here, the Conservative Party, dislike two taxes above all others: rates and council tax. There are a very limited number of ways of avoiding these taxes. Whilst income tax is aimed to be progressive, loopholes in our tax system are such that it’s easy to legally reduce liability. On the estimated council reserves, I assume that this figure’s taken from councils' consolidated accounts and includes schools' reserves. There are just under 1,500 schools in Wales, which would make £15 million if the average school balance was £10,000, and £45 million if it was £30,000. Why do schools need balances? Firstly, they have to have money in reserve. If they lose pupil numbers in-year, then, at the pupil level annual school census, they have to pay the money back, save for renovations and improvements that are not a council responsibility. Councils use reserves against potential departmental overspends—social services throughout most of Britain. Also with reserves, councils borrow for capital schemes from their reserves, which is cheaper than borrowing at market rate, especially at times of low interest rates, so money will appear on both sides of the balance sheet.

Finally, some councils use part of their reserves to form an insurance against a school fire that destroys the building. I also understand that, this year, councils have been using reserves to support expenditure. However, reserves used for revenue expenditure can only be used once and has the effect of creating a funding gap for future years.

Now, I'll turn to council tax. Band values were set on 1 April 2003. There are people here who were in school at that time. It is regressive; it was meant to be regressive. Band A is properties up to £44,000; band D £91,000 to £123,000; band H, £324,000 to £424,000. Council tax is set on band D, and all other band payments are based on that. Properties in band A pay 75 per cent of the amount charged on band D. Properties in band H pay twice the amount on band D. This is where it gets regressive. A £40,000 house will be charged two thirds the amount of council tax for a £120,000 house, despite it only being a third of the value. A £420,000 house will be charged twice as much as a £120,000 house, even though it's worth over three times as much. And it will get—. This is where it becomes unfair; it is regressive, but the system was built to be regressive, because it came in at the end of poll tax, and they still wanted people in low-value properties to be paying—