Detholwyd y gwelliannau canlynol: gwelliant 1 yn enw Lesley Griffiths, a gwelliannau 2 a 3 yn enw Siân Gwenllian. Os derbynnir gwelliant 1, caiff gwelliannau 2 a 3 eu dad-ddethol.

Eitem 9 y prynhawn yma yw dadl y Ceidwadwyr Cymreig ar ariannu llywodraeth leol. Galwaf ar Sam Rowlands i wneud y cynnig.

Cynnig NDM8238 Darren Millar

Cynnig bod y Senedd:

1. Yn nodi yr amcangyfrifir bod gan awdurdodau lleol £2.75 biliwn mewn cronfeydd wrth gefn y gellir eu defnyddio.

2. Yn cydnabod y rôl hanfodol y mae awdurdodau lleol yn ei chwarae o ran darparu gwasanaethau cyhoeddus ledled Cymru a'r heriau cyllido sy'n eu hwynebu.

3. Yn gresynu at y ffaith bod y cynnydd cyfartalog yn y dreth gyngor yng Nghymru ar gyfer 2023-2024 yn 5.5 y cant.

4. Yn galw ar Lywodraeth Cymru i:

a) comisiynu adolygiad annibynnol o fformiwla ariannu llywodraeth leol Cymru;

b) gweithio gydag awdurdodau lleol i ddefnyddio eu cronfeydd wrth gefn y gellir eu defnyddio i gadw'r dreth gyngor mor isel â phosibl;

c) ei gwneud yn ofynnol bod unrhyw awdurdod lleol sy'n cynnig cynnydd gormodol yn y dreth gyngor yn cynnal refferendwm lleol a chael canlyniad cadarnhaol yn y bleidlais cyn gweithredu'r codiad arfaethedig.

Cynigiwyd y cynnig.

Thank you again, Deputy Presiding Officer. I'm delighted to open this debate today on local government funding. As our motion outlines here today, we propose that the Senedd first of all notes that local authorities have an estimated £2.75 billion in useable reserves, recognises the vital role that local authorities play in delivering public services across Wales and the funding challenges that they face, and regrets that the average council tax rise in Wales for the next year is 5.5 per cent. Also, we call on the Welsh Government to commission an independent review of the Welsh local government funding formula, that the Welsh Government work with local authorities to use their useable reserves to keep council tax as low as possible, and require any local authority proposing an excessive increase in council tax to hold a referendum and obtain a 'yes' vote before implementing the proposed rise. Let's be very clear, the funding of councils in Wales to enable them to deliver the services that our residents expect is wholly in the gift of the Welsh Government, who currently choose to provide around three quarters of local government's funding. The rest, in the main, as we know, is funded through council tax demands.

This shows very clearly that decisions made by the Welsh Government have a big impact on the finances of Welsh local authorities, with major levers of funding that local authorities have in terms of delivering their services coming from the Welsh Government. It's because of the significance of the impact of this funding on our communities that today we are calling for the Welsh Government to commission an independent review of that funding formula. Remember, it's the thing that determines how much funding is provided to each local authority to enable them to deliver those important services that our residents expect.

Of course, there have already been some reviews in minor detail from time to time that the Minister and previous Ministers have had with local government. A recent example of this was in regard to rurality, which wasn't properly accounted for in the past, but there has been some work to ensure that does take place. But that's just a one-off issue that is looked at, not going for a full review. As a further example, I've raised my concern in the past about some of the data being used and the recency of the data being used to determine that funding, because some of it is decades out of date.

There are also some actual measures in there that I believe are still not being properly considered. These include the appropriate level of funding to support older people. The Minister will know that the Welsh Government's funding formula assumes that an extra £1,500 a year will be needed to support each person over the age of 85. However, for people aged between 60 and 84, this figure is reduced to £10.72. It's a huge discrepancy. Surely, the assumption that providing care for an 84-year-old costs less than 1 per cent of the cost required to care for an 85-year-old shows that the funding formula is not appropriate in its current form. I would have thought it would be much more sensible that the assumed level of funding needed to care for our elderly increases gradually, not at a cliff edge. That's just a quick example of the type of thing that an independent review would seek to challenge, taking it away from the potential party politics. What I find perplexing, Deputy Presiding Officer, is that if the funding formula is currently so good, why would the Government want to resist an independent review? I expect the Minister, surely, today would want to welcome an independent review of its funding formula.

Finally, the funding formula must take the levels of reserves held by local authorities into account. I mentioned earlier that the current level of reserves held by local authorities is around £2.75 billion in their useable reserves, numbers that only the Welsh Government would want to dream of having in their reserves. It cannot be right that some councils over a period of years have been able to build up significant reserves, some close to £300 million, while other councils are barely able to get by. There seems to be a significant gap in the levels of funding that some councils are able to enjoy compared with others that enables this financial cushion. We know that Rhondda Cynon Taf council holds around £250 million in their reserves, Caerphilly around £233 million in their reserves, Carmarthenshire around £230 million in theirs. Whilst many of these reserves will be held for good reason, it cannot be right that £3 billion of public money is squirrelled away, not being used to support such important public services that our residents rely on. Therefore, I think it's essential that the local government funding formula takes account of the reserves held by local authorities to better support the finances of those authorities that do not have large reserves and to encourage those authorities that are sitting on large reserves to make better use of them.

Having focused on the funding formula, I will now briefly turn my attention to council tax. The average council tax increase this year was 5.5 per cent, with a quarter of councils increasing tax by 7 per cent or more. These significant increases can have a real impact on the household budgets of people throughout Wales. It's important that those people are able to make their voices heard. I know that the Welsh Government are very, very keen to see active, engaged citizens in our communities, and a great opportunity to increase that engagement is to introduce a requirement for excessive council tax increases to be put to the public in a referendum, so I'm sure the Minister will welcome that motion here today also. Allowing the public to have a direct say over large council tax increases will improve that public trust in how their local representatives set their local levels of council tax and that can only be a good thing for democracy. 

So, I'll leave my contribution there, Deputy Presiding Officer. I look forward to the other contributions from Members today, and I call on all Members to back today's motion unamended.

Rwyf wedi dethol y tri gwelliant i'r cynnig. Os derbynnir gwelliant 1, caiff gwelliannau 2 a 3 eu dad-ddethol. Galwaf ar y Gweinidog Cyllid a Llywodraeth Leol i gynnig yn ffurfiol gwelliant 1 a gyflwynwyd yn enw Lesley Griffiths.

Gwelliant 1—Lesley Griffiths

Dileu popeth ar ôl pwynt 1 a rhoi yn ei le:

Yn cydnabod bod y dreth gyngor yn un o'r mathau mwyaf annheg o drethu a'i bod yn effeithio'n anghymesur ar ardaloedd tlotach ac yn croesawu'r ymrwymiad drwy’r Cytundeb Cydweithio i wneud y system yn decach ac yn fwy blaengar;

Yn cydnabod rôl hanfodol awdurdodau lleol o ran darparu gwasanaethau cyhoeddus ledled Cymru, y cynnydd sylweddol yn y setliad llywodraeth leol yn 2022-2023 a 2023-24 a'r heriau ariannu sy'n wynebu'r awdurdodau serch hynny.

Yn nodi bod treth gyngor band D ar gyfartaledd yng Nghymru £186 yn llai na'r cyfartaledd yn Lloegr.

Yn galw ar Lywodraeth Cymru i:

a) parhau i ddatblygu a chynnal fformiwla ariannu llywodraeth leol Cymru mewn partneriaeth â llywodraeth leol;

b) parhau i gydnabod pwysigrwydd gwneud penderfyniadau democrataidd lleol ynghylch cyllidebau cynghorau a gwasanaethau cyhoeddus.

Cynigiwyd gwelliant 1.

I move.

A galwaf ar Llyr Gruffydd i gynnig gwelliannau 2 a 3 a gyflwynwyd yn enw Siân Gwenllian.

Gwelliant 2—Siân Gwenllian

Ym mhwynt 4, dileu is-bwyntiau (b) ac (c).

Gwelliant 3—Siân Gwenllian

Ychwanegu pwyntiau newydd ar ddiwedd cynnig:

Yn cydnabod bod y dreth gyngor yn un o'r mathau mwyaf annheg o drethu a'i bod yn effeithio'n anghymesur ar ardaloedd tlotach y wlad.

Yn croesawu'r ymrwymiad drwy Gytundeb Cydweithio Plaid Cymru a Llywodraeth Cymru i wneud y system dreth gyngor yn decach ac yn fwy blaengar.

Cynigiwyd gwelliannau 2 a 3.

Diolch yn fawr, Dirprwy Lywydd. Now, I certainly welcome the opportunity to speak in this debate and I think, at the start of a new financial year, it's right that we take the opportunity, I think, to reflect on the current state of local authority finances and the resulting implications for council taxes. And the reality is that an average rise of 5.5 per cent in council tax across Wales for the next financial year will be challenging for many people who are already struggling for reasons that we're all too familiar with.

But frankly, I think it is certainly disingenuous for the Tories to bemoan these hikes in council tax without acknowledging the root cause of the issue, namely the devastating impact of 13 years of Tory-driven austerity and economic incompetence that have affected local authorities and their ability to sustain essential public services. Austerity, as I've said before, is a political choice and it is a choice that disproportionately shifts the burden onto the poorest and most vulnerable in our society, and that stems—this whole situation stems directly from over a decade of cuts and under-investment that has left public services in an existentially parlous state. And now, the latest round of Tory austerity imposed on Wales—it's going to be an utterly disastrous experiment and it's leaving a gaping £30 billion hole in UK public finances, which is—

Will you—

Okay, very briefly.

Thank you. I appreciate it, Llyr. You will remember, in the last 10 years, the UK Government gave enough funds to the Welsh Government to freeze council tax for three years and yet, this was never passed on to the local authorities to do that—

Well, okay, you made the point, but what I would say is that devolution is all about allowing this place to make its own decisions, and, similarly, devolution to local government is about allowing them to make their own decisions as well—

Yes. But would not you agree—

Sorry, no. [Interruption.] Look, I'm not going to quarrel with you. Sit down, because I've allowed you to intervene.

All right, all right. Calm down.

There we are. Okay, thank you. 

So, I think it is worth noting the extent of these pressures on local authority finances. And yes, there are challenges, clearly, but you can't absolve yourself from being part of that. [Interruption.] 

Janet—

Thank you, Dirpwy Lywydd. The WLGA, as we know, has quantified much of these budgetary pressures on Welsh councils. They've talked about figures in excess of £0.5 billion for next year on top of a £0.25 billion this year. You can do the maths. We know the situation and the challenges facing authorities in my region— Gwynedd, Conwy, Flintshire—and all Members here will be more than familiar with the pressures facing their own local authorities as well. 

So, to turn to the elements of the motion that I believe have merit, I think that it's absolutely right that we do have a debate and an independent review of the formula through which local government is funded, yes. As a party, we've argued for some time for the need to look again at the system and to look at a needs-based formula involving a range of factors, including poverty and rurality. But there will always be winners and losers, no matter what formula you put in place, and you can cut the cake up differently, but we all know as well that the cake itself is too small, isn't it, really? So, there's no silver bullet, and I don't think anybody is fooling themselves there. But, yes, let's have the review, because there's no harm at all in looking at options and revisiting these things on occasion.

When it comes to reserves, there will always be a need for local authorities, of course, to maintain a certain level of reserves, and I'm not hearing anybody querying that. But in respect of this figure of £2.75 billion, I think that's an over-simplication of a more nuanced picture. Yes, there are conversations to be had, of course, about how local authorities can efficiently and responsibly allocate their resources for optimal outcomes. Personally, I think that's happening already to a sufficient extent. Local authorities are aware of that responsibility, and, of course, it is their responsibility. I come back to this point about devolution; it's about their role, they are answerable—and they will be answerable, every election time, so we shouldn't shy away from that. And I've just realised now that my time is running out. I stick to the same principle, of course, when it comes to referenda on council tax levels, local authorities are empowered to make these decisions, and in turn, they are accountable to their electors for those decisions at election time—yes? There's a slippery slope here; a referendum for all decisions that councils make.

So, I think the debate we should be having is about changing the regressive nature of the council tax, and I'm glad to say that, as part of the co-operation agreement with the Welsh Government, that programme of work is happening. We are looking to develop a fairer council tax. The first phase of the consultation has happened and the second phase is coming soon. So, I'm not standing here saying, 'Support the Welsh Government's delete-all amendment'; I don't agree with that. What I'm standing here and asking fellow Members to do is to support Plaid Cymru's two amendments, so that we can fine-tune the Conservative motion. Diolch.

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—

Will you take an intervention, Mike?

Please do.

As you outlined, the nature of the ratcheting of council tax at the moment—are you suggesting, then, that there should be a directly proportional tax on property in Wales?

I'm about to say that. Thank you, Sam. My preference is that all houses are revalued and that council tax is a fixed percentage of the value of the property. I will again call for either more bands and a change to the multiplier, or a spot-price valuation, with each property paying the same percentage of its value.

Moving on to standard spending assessment, which is where we get our aggregate external finance from, it's the Government mechanism for allocating grant based on a calculation of what each local authority needs to spend to deliver a standard level of service at a common rate of council tax. For the purpose of calculating individual SSA allocations, local government is broken down into 55 notional service areas. When I was involved in highway maintenance, it went from 52 per cent population and 48 per cent road length to 50 per cent of each. A minor change, you may say. It moved several hundred thousand pounds from Swansea, Cardiff and Newport into Powys, Pembrokeshire and Gwynedd. Again, you might think that's a good idea.

The standard spending assessment per head for each council varies between £2,520 at Blaenau Gwent to £2,049 at Monmouth. A separate method of distribution exists for each service element, in order to distribute the total across authorities. The distribution method falls into two categories: formula based and distribution based. I'm sure that Welsh Government Ministers are fed up of me asking for this, but why can't they publish the workings? Show how each local authority's standard spending assessment is calculated. You must have it, or you wouldn't be working on it. The aggregate external finance is calculated from the SSA and councils' nominal council tax receipts. Again, the figures are published, but the calculations are not.

Finally, what you would expect is that the councils with the most properties in bands A and B would get the most aggregate external funding, and those with the most in band D and above the least, which is actually what happens. So, I will again finish up on my request, which I will probably do at the next meeting as well, when we discuss this: can the Government just publish their workings?

I have the great fortune of being able to represent half of the wonderful county borough of Conwy, but unfortunately, residents in that county borough this year are facing the highest level of increase in their council tax bills on record, and, of course, it is the highest this year across the whole of Wales, at 9.9 per cent. That is an unacceptable increase, in my view, at a time when people are facing cost-of-living pressures, and it's particularly galling to people in my constituency to be facing that sort of increase when you look at the hundreds of millions of pounds that are being hoarded by some local authorities in south Wales, because if those resources were freed up, then, there would be more cash to go around to help hard-working families to be able to meet the cost of these bills. That's why I'm all in favour of seeing a reformed funding formula that takes into account the level of reserves that local authorities are holding, in addition to fine-tuning the formula so that it's fairer to older people, because, frankly, they're being overlooked at the moment in the way that the funding formula is working. We also, of course, have a rural sparsity issue in many rural local authorities. They don't seem to get the same sort of fair deal that urban local authorities get with their funding, and that's also something that needs to change.

I listened with interest to the comments from Llyr Huws Gruffydd, when he was objecting to any kind of assertion that—God forbid—the public should be given a right to have their say via a referendum if there's an excessive council tax increase proposed. I know it's galling for Plaid Cymru to ask the public's view on anything, particularly when independence is so unpopular in Wales, but the reality is that this system of enabling referendums for excessive council tax increases does act as an incentive for councils in England to keep their bills low, and that's why they've got lower average increases in England since the introduction of that rule than we have seen here in Wales.

Now, I expect that the Minister, in her response to this debate later on, will refer to the fact that, on average, council taxes are lower in Wales than they are in England and other parts of the United Kingdom, but we mustn't forget this: as a proportion of our income, because pay packets are much lower in Wales, we actually pay more in council tax than any other part of the United Kingdom, and that's because of the dreadful mismanagement of the economy here in Wales over two decades by the Welsh Labour Government and those who have propped them up in both the Liberal Democrats and Plaid Cymru. So, we've got to get these things on an even keel.

Having referendums to secure a 'yes' vote prior to any significant increases being introduced, I think, is the right step forward. People in Conwy shouldn't be having to pay a 9.9 per cent increase when they're already trying to make ends meet. And we know that the UK Government—. It's not a shortage of cash—the Welsh Government seems to have enough cash to be able to send £155 million back and burn through £0.25 billion on an airport and still fork out hundreds of millions extra, even, on a metro system, today, we learn. They're able to find that down the back of the sofa, yet they can't seem to find the resources for people to be able have their council tax bills frozen in a year when they really need to see those bills frozen. So, I don't accept that there's not enough money to go around. We've got the money; we just need to get on and facilitate the freezing of council tax bills here in Wales.

The impression this debate gives is that local government somehow has extra cash lying around, whereas the reality is that, after a decade of Conservative austerity, followed by huge inflationary pressures caused by the Liz Truss Government, local authorities are in dire straits. The future is also bleak under Rishi Sunak as there was nothing for public services in the spring budget. As the First Minister said yesterday, the Chancellor failed to do the most basic things on which growth depends, leading to a collapse compared to anything achieved in the last 60 years, leaving families across the UK worse off. As a councillor, I remember the Chancellor George Osborne delivering cut after cut to public services, saying the deficit had to be paid off. Yet, under successive Tory Governments, the deficit has grown out of control.

Carolyn, will you take an intervention from Janet Finch-Saunders? 

No, I'll carry on. We heard this morning in committee that service providers fear we could be about to enter another period of dire austerity. As a council, we organised and restructured, making nearly £100 million-worth of savings over those 10 years. We went from six depots to one, rationalising staff by nearly 40 per cent, year after year salami slicing departments by 30 per cent. When we could not cut vital services, such as social healthcare and education, any more we took to street scene then and anything deemed non-statutory. And now we're really concerned about leisure services, as we've been discussing at committee.

Ten years ago, council tax used to be 24 per cent of the budget—the rest came from Government. But now it's, on average, about 30 per cent of the budget. Some Conservative-led councils did cut service funding rather than raise council tax, and I remember Conwy council cutting education funding and other services rather than raise council tax significantly, and, in my first year as an MS, I remember visiting a school in Colwyn Bay who were really struggling because of that cut in education funding. The pot was left empty for the new administration following last year's elections. They were unable to deliver vital services, and so council tax has had to go up to help deliver them, including education again, and to help those most vulnerable.

Carolyn, sorry, I've got another request for an intervention, from Sam Rowlands.

I'm not taking them—I'm just carrying on. I've got a lot to say here, okay.

Thank you.

Other authorities have cut officers and services rather than raise council tax, meaning they now have a shortage of officers to deliver core services, such as planning or social healthcare, and technical highway officers to apply for Welsh Government grant funding for active travel. More pressure is put on councils now due to the way replacement EU funding bids have to be made by local authorities, which is another issue.

Reserves cannot be used for ongoing revenue funding, because, once they are gone, that is it, and, as Mike earlier said, part of the reserves are the schools' budgets. It's vital some reserves are held should there be storm damage to council-maintained infrastructure. We've seen in recent years landslides and subsidence causing major damage from monsoon-like rainfall. Heavy snowfall means costly, prolonged gritting. School transport has increased by 40 per cent, and is very volatile. And if an operator goes out of business, the price rises significantly, as competition reduces. And if a family moves to the area in-year with significant caring needs, it can cost a local authority hundreds of thousands of pounds. That's why they need these reserves, especially the larger authorities.

I've previously asked the Minister and I've previously asked at the Local Government and Housing Committee for the funding formula to be reviewed, and the response was that it would be. One area that perhaps needs reviewing is funding for social services, based on the average age of a population. Conwy, for instance, has the highest level of over-80s in Wales. There have been calls for per capita funding, but then those in more rural areas would lose out significantly; it's a careful balance. Councils are often our biggest employers, even despite the reduced workforce, delivering vital public services that our communities and our economy rely on. They educate, provide planning, housing, transport and all the support services that take pressure off our NHS. They've been undervalued by the Tories, and there needs to be a change of UK Government, with a Treasury that respects and values what our councils do. Thank you.

It's my pleasure to contribute to today's Welsh Conservatives debate, especially as many people across Wales will be receiving their new council tax bills in a matter of days. I think, therefore, it's imperative for all of us to remember—paraphrasing, indeed, a great American President—that Government is of the people, by the people and for the people. We should therefore ensure that council tax payers are getting the best value for money while they support vital local services.

So, are we getting value for money? Well, no. In Labour-led Swansea, there's a blistering 5.95 per cent council tax rise from April, costing the average band D property in the area £1,893 over the next year—that's treble what they would have paid in 1999. In Labour-led Bridgend, a 4.9 per cent rise will cost band D properties £2,052—a 217 per cent rise compared to 1999. And in Neath Port Talbot, it's 4.5 per cent; in Rhondda Cynon Taf, it's 3.9 per cent—better, but still adding costs to the average household when they're struggling. I've heard the Labour and Plaid benches saying it's not their fault, it's all to do with austerity, and they've got no money left, and yet, together, the councils I've mentioned are sitting on useable reserves of over £0.75 billion. Two, Swansea and Rhondda Cynon Taf, make up nearly two thirds of them. RCT by itself, with £270 million in reserves, has the highest level in Wales.

In light of these figures in South Wales West, I must say that I agree with the former Labour leader of Bridgend County Borough Council when he said that, and I quote, 'an easy and lazy option when it comes to local government is to blame austerity and the Tories. It too often ignores other factors, such as poor decision making, when it comes to both budgets and service delivery.' That's a former Labour leader of Bridgend council. I couldn't agree with him more, especially when money for services is being set aside for vanity projects, unaffordable targets and simply bad accounting, and Welsh Government is at the very heart of this.

There's the fact that nearly £100 million was written off in debts by Welsh councils over the last five years, including non-domestic rates, court costs and invoices on top of council tax; there's the fact that RCT is reducing black bag bin collections to once every three weeks to avoid a fine of £420,000 from Welsh Government if it doesn't meet recycling targets; there's the fact that, after declaring a climate emergency in 2019, Swansea council has estimated that it would cost £187 million for it to reach net zero by 2030 under Welsh Government targets, and it's budgeted £4 million for it.

Thankfully, attempts by Swansea city councillors to name rooms after themselves in the city's new £50 million arena were paused last year. However, this lack of prudent accounting reaches the very top of Government here in Wales. Not only is the Welsh Government wasting vast amounts of cash on an unpopular and unwanted 20 mph national speed limit, due to COVID, it failed to spend £155 million in public money due to poor account management, and had to pay it back to the Treasury—[Interruption.] That's money small businesses and councils could have used to keep a stable footing and even pass on savings to taxpayers in this time of need.

I know the leader of Plaid Cymru before has said that council tax is a regressive form of tax, however that fails to take into account the local government funding settlement, which so generously provides those local authorities with the highest level of reserves, leaving others who break even to make up the shortfall with even bigger council tax increases. The local government funding formula, complex and outdated, doesn't give councils or taxpayers a fair deal. Surely the best form of progressive council tax, instead of the one outlined in the co-operation agreement and in Plaid's 2021 manifesto, would be one that took less money out of people's pockets in the first place. Perhaps we should be of the view that increasing taxes should be the last resort, rather than the first. So, yes, I do believe that the local government formula should be reviewed independently, and, yes, councils should be ensuring that their useable reserves are used for helping council tax payers.

Llywydd, through the Welsh Government's council tax reforms, I see nothing progressive. When a small business trying to keep their heads above water after two years of lockdowns are now hit with the potential of a 300 per cent council tax rise if they don't meet some arbitrary 182-day occupation target, these are the things and these are the times when we have to take a stand. So, I therefore wholeheartedly support the motion before us today, because something needs to change. Diolch yn fawr.

It's obvious that the Conservative Party opposite have no idea what the duties and responsibilities of local government are, so thank you for extrapolating on that. So, I rise to support the amendments tabled by Lesley Griffiths. We have now endured more than a decade of Tory austerity, and it will become a teenager this May. From David Cameron through Theresa May to Boris Johnson, Liz Truss and now Rishi Sunak—a right-wing ideology at its heart of shrinking the state, which has totally decimated public services.

The Welsh Government's current funding settlement, which comes mainly from the UK Government, is not sufficient. It is not sufficient to meet all the extraordinary pressures that Wales is now facing, let alone all of our priorities for the people of Wales in 2023-24. Even after the additional funding in the autumn statement, our settlement is still worth up to £3 billion less in real terms and up to £1 billion less next year. An abysmal capital funding for Wales and no electrification for Wales. Despite this, the Welsh Government is providing an additional £227 million—providing an additional £227 million despite this—in 2023-24, and £268 million in 2024-25, to the local government settlement in Wales. This is the reality, so I would like that to be heard.

This builds on the funding that was outlined as part of the Welsh Government's 2022 spending review, now providing—[Interruption.]—now providing £1 billion up to 2024-25. Recently I've met with the leadership of Caerphilly County Borough Council in the Senedd, last week, and I know, from speaking to council leader Councillor Sean Morgan and the deputy council leader, Jamie Pritchard, that Islwyn's local authority greatly values the constructive working relationship—constructive working relationship—it has with the Welsh Government and the Ministers.

So, adjusting for transfers, the core revenue funding for local government in 2023-24 will increase—this is the reality—by 7.9 per cent on a like-for-like basis, compared to the current year, and no authority will receive a less than 6.5 per cent increase. Caerphilly County Borough Council saw a rise of 6.9 per cent. But we all know this is not enough and it creates real challenges, and, thanks to the UK Government, this is what local government is being tasked to do: to work with not enough. This is the reality. And whilst working closely with local authorities, partners continue to advance progressive causes, the settlement including funding to enable authorities to continue to meet the additional costs of introducing the real living wage for care workers and pay demands, something that I know will be hugely welcomed—and, again, it's not enough, and, for care workers, it is not enough—whilst the Welsh Government provided £20 million capital in each year to enable authorities to respond to our joint priority of decarbonisation to meet net zero—and a very confused narrative as to what the party opposite wishes local authorities to do around that.

So, I have a serious question of the Conservative benches opposite. And if they are genuine—really genuine—about reform of tax in this country, perhaps they would like to go straight to the top. Rishi Sunak last week provided a summary of his income and gains, and what they showed was that the richest Prime Minister Britain has ever known—[Interruption.]—if I can finish—is paying—[Interruption.]

Let the Member conclude her contribution, please.

So, the richest Prime Minister that we have ever known—[Interruption.]—I would like to finish—is paying a lower tax rate than working people, who face the highest tax burden in 70 years. How is that fair? How is that fair to the Welsh taxpayer, how is it fair to social care workers, who are paying their way? 

It's called ambition. Ambition.

It's the same old—. Are you saying social care workers don't have ambition?

I am saying that all—

We'll not have discussions.

It's the same old Tories: one rule for the rich and another rule for the working man and woman. And it is apt that the BBC have made a new adaptation of Charles Dickens for Sunday evenings, as the present Tory Government is taking the UK back to the Victorian age—and that is not me just saying this; go and talk to the International Monetary Fund.

So, only, Deputy Llywydd—[Interruption.] They obviously don't like it. Only with the election of a future UK Labour Government can we hope to restore our beloved yet totally battered and beleaguered public services in this country, and it is way over time that we do that. Thank you.

I'm really happy to be supporting this motion, along with my Welsh Conservative colleagues. In England, local authorities, fire authorities, police and crime commissioners are required to determine whether the amount of council tax they plan to raise is excessive. Our Secretary of State sets thresholds of excessiveness, known as 'referendum principles' for different classes of authority. Should the same rule be applied in Wales, a referendum would certainly have been triggered in Conwy. This would have allowed people their say on the 9.9 per cent increase brought in by Conwy First Independent Group, Welsh Labour and Plaid Cymru. And we have north Wales Members here from Plaid and Labour actually supporting this.

We all know the power of referendums to make a difference. This is also true when it comes to council tax. For example, a referendum was held by the Bedfordshire Police and Crime Commissioner, who proposed a rise in council tax of 15.8 per cent in 2015-16. A poll was held on 7 May 2015, where 30 per cent of voters supported the proposal, whilst 69.5 per cent opposed it. The Welsh Government does not currently provide Welsh residents with the same democratic levers to hold councils like Conwy and this Welsh Government to account, when it talks about excessive council tax increases. It's not that long ago when I held the portfolio for local government, Sam, and I tell you now: there was a cap. I always remember there was a cap that was—[Interruption.] We have used the cap previously. So, I would also endorse the referendum idea and say that we should reintroduce the cap here.

As a consequence of this, the decision by Conwy council to raise council tax by 9.9 per cent, the steepest increase of anywhere in Wales, is now representing a worrying burden on many hard-pressed— 

Will you take an intervention?

Yes, I will. 

Thank you. Do you accept that these councils are facing a huge dilemma of either decimating the public services that they provide, leaving vulnerable people at the mercy of God knows what, or increasing council taxes? So, are you saying, in opposing the increase, that you, as a Conservative, would actually advocate the annihilation of services?

No, what I am saying—. What I have heard very loud and clear to me is that they want the kind of council tax increase that my colleague Sam Rowlands—. Less than 3 per cent. That was the council tax—[Interruption.] Well, yes. But, as a Member, you represent Conwy. You should not be condoning 9.9 per cent.

Well, are you condoning cutting the services—[Inaudible.] 

Based on this new rate, that means—

Can I remind Members that this is a debate? It is not a conversation between two Members, okay? 

Oh. This means that council tax in the Conwy local authority will have increased by an astonishing 224.16 per cent, and my colleague Sam Rowlands, is very—. You know, very small proportion of that. The rest was Labour-Plaid Cymru. This represents the largest percentage increase—oh, and some independents—of any local authority in Wales. Growth in regular pay among employees in Great Britain was at 6.4 per cent in September to November 2022. There's no doubt that the 9.9 per cent rise cannot be justified, especially when Torfaen—[Interruption.] No. I would have done, you know, but you won't. When Torfaen has managed 1.9 per cent. But we know why Torfaen can manage 1.9 per cent, when we see all the money pooled together and the resources they have in terms of their reserves.

Rather than taking action on wasteful spending or management, our council now expects local council tax payers to pay the bill. So, £155.5 million has been sent back to the UK Government. Some of that could have come to Conwy. None of you here will have faced those people and businesses when we had the additional lockdown for three weeks by your Welsh Labour Government. A lot of those businesses were on their knees. That money could have gone towards them. That money could have gone towards social care, where again—it's a pity that the health and social care Minister—. Again, they would have really benefited from that money going into their budgets. It is obscene that money came over here from the UK Government—[Interruption.] Sorry, Joyce, no. It's obscene that money came over here to spend during an emergency and the COVID pandemic, and instead of spending it or providing it or allocating it to where it was really needed, you just sat on it, thinking perhaps that the UK Government wouldn’t claw it back. But all I will say is that you need to have the ambition and the aspiration as a Government here that our Prime Minister of the UK has. Thank you.

Galwaf ar y Gweinidog Cyllid a Llywodraeth Leol, Rebecca Evans.

Thank you, Deputy Presiding Officer. I hadn’t intended to use this debate to educate Members about the 2020-21 consolidated accounts, but I will begin with that, because we’ve had a number of contributions that have just been so factually incorrect it’s very difficult to let them go. So, we’re talking here about the year that was the pandemic year. Obviously, that was an exceptional year. We had a lot of additional funding come to us very late on in that financial year. What we did do as a Government was operate within our overall departmental expenditure line budgetary control, set by the Treasury, and of course we should have had a reasonable amount of flexibility to switch between revenue and capital controls. Our decisions to maximise our capital expenditure were made having regard to the rules within Treasury’s consolidated budget guidance that revenue budgets can be switched to capital, and that is a practice that we’ve used in the past many times to manage our financial position. And we were given to understand by Treasury that we could do that, and it would be managed at the end of the year. There was a decision, after protracted correspondence with the Treasury, that actually they wouldn’t allow that after all.

But just to be really clear and to have these comparisons: the total underspend by all UK Government departments in that year was £25 billion. The Department for Health and Social Care alone underspent by over 9 per cent, sending back £18.6 billion of money unspent to Treasury. Overall, UK Government departments returned almost 6 per cent of their funding to Treasury that year. In Wales, the figure returned was only 1 per cent of our available resources. The Barnett share, had we sent back our Barnett share of what was returned by UK Government departments, would have been over £1 billion. In the event, it was £155 million, but it would have been nothing at all if we had been allowed to have that revenue-capital switch. [Interruption.] I’m not taking an intervention on that because I’ve set out the facts.

Now, I’d like to begin by recording my thanks to local government elected members and staff across all authorities for the critical work that they do for communities, people and businesses across Wales. And it has been an incredibly busy period for local government. Councils across Wales continue to deliver and we continue to support them to do so. We’ve supported them and we’ve worked really closely with them through the tough times of austerity, through floods and the pandemic, and now we continue to work really closely with them through the cost-of-living crisis. In the face of inflation at over 10 per cent, authorities will be facing real challenges in delivering services and balancing their budgets whilst supporting their local communities by keeping council tax rises as low as they can. And the nerve of the Conservative benches bemoaning council tax rises when the UK Government has absolutely sought to starve council services and the rest of the public sector over many years is absolutely ridiculous.

The UK Government’s decision to provide no funding at all for public services in the spring statement beggars belief. So, we have to do what we can with the levers that we have, and our budget has prioritised those front-line services. In this financial year, local government in Wales received an increase in their budget of 9.4 per cent, which builds on the 7.9 per cent that they received last year. These are good increases and they reflect the priority that we give in our budget to front-line public services.

Nevertheless, inflation is hitting local authority services and household budgets across Wales, and councils have had to make those difficult decisions in setting out their budgets for the next financial year. And of course, they will have considered all of the options available to them in making those decisions. They will have looked at which services they can cut further without impacting on those most in need. They will have looked at universal services, on which we all rely, and whether they can be made more efficient. And they will have considered which charges they can increase, or where they can introduce new fees, and they will of course have looked at the price of fuel and the forecasts for future inflation. And of course they would have gone on to make judgments on how far they can use their reserves to help with each of these decisions without risking their long-term position.

And on reserves, it’s worth considering, really, that in relation to the overall budget of local government, at an all-Wales level, the widest interpretation of useable reserves is 26 per cent of the total annual expenditure, so that's three months' provision for all of the costs of local government. But, actually, general or unallocated reserves would just cover 10 days, and I think that really gives a different perspective.

Of course, councils will be considering the reserves very carefully. While some colleagues have said that £2.75 billion is a large sum, it's too simplistic to take that technical description of useable reserves, which does, as Mike Hedges said, include individual schools' reserves and the housing revenue account reserve, as well as grants for specific projects, and to assume that that can all be made to make the hard decisions that local governments face in this way go away without having to worry about next year.

Councils, obviously, will have carefully thought about the impacts of council tax increases on their communities, and those decisions on services, reserves and council tax rises are, quite rightly, taken by locally democratically elected members, and by people who take their responsibilities seriously and who face the people whom they're making decisions for every day in their communities. Council tax is an essential part of funding local government, raising over £1.8 billion a year. But, we don't impose an artificial cap on those decisions here in Cardiff, which would affect communities across Wales, and we don't impose the additional cost and burden of local referenda for increases above a centrally chosen level, as they do in England.

There have been a number of references to some local authorities in particular, but the average band D council tax for Wales for the next financial year is £1,879, so that's £186 lower than the average across the border in England. I don't agree with Darren Millar; it's not possible to make those direct comparisons across for a number of reasons, not least because our council tax reduction scheme support is, actually, more generous over here and much wider here in Wales.

Councils will, obviously, need to consider the implications for future years when using reserves or setting council tax. On a Wales basis, a 1 per cent increase in council tax equates to £18 million, so a decision to set a lower rate by 1 per cent over three years could mean a council accepting a loss of £54 million over that period. I think a useful example, just to highlight, really, the different choices and what that means over time, is to look at Conwy, which has been mentioned several times this afternoon. If that local authority had set band D levels at the same value as Gwynedd in each year in the last decade, the council would have collected an additional £63 million. If they'd set their band D at the same level as Denbighshire, they would have collected an additional £44 million. Residents in Conwy have, however, paid £1,218,000 less in council tax over that period as compared to a Gwynedd resident, or £865,000 less over the 10-year period compared to Denbighshire. So, we see, now, the cumulative impact of that in the current situation.

So, just to think about council tax more widely, and to recognise the important work that we're doing with Plaid Cymru, because council tax is a regressive form of taxation, disproportionately impacting poorer areas and poorer households, and that's why we are committed to working with Plaid Cymru to make the council tax system fairer and more progressive. We're absolutely leading the way in doing that and I will report back to the Senedd very regularly on the progress that we're making on that critical commitment.

Daeth y Llywydd i’r Gadair.

I ymateb i'r ddadl, Peter Fox.

Diolch, Llywydd, and can I thank everybody for contributing this afternoon to this debate? We're all as one when we praise local authorities and the great work that they do, and this isn't about what they do; this is about the funding system and how it needs to be fairer for both council tax payers and the councils themselves.

Can I thank Sam for opening up the debate and sharing again that there is £2.75 billion in useable reserves? I've done a lot of research on this, and £2.75 billion in reserves is a £600 million increase in useable reserves on the previous year. Useable reserves are not just the general reserves; they are the earmarked reserves as well. Yes, there is a portion that is school balances, which is a minuscule amount of the £2.75 billion. There is also a portion of capital in there that is a relatively small amount. The general largest pots are in the earmarked reserve, and many times those have been inflated and generally or often haven't got plans to utilise them over the coming few years or previously. So, there is certainly a need to review the situation there.

We have to reconcile the fact that there is £2.75 billion-worth of usable reserves at the disposal of councils whilst we have a council tax average rise of 5.5 per cent. My contention is that there is something fundamentally wrong with a formula that enables some councils to provide their services while accumulating huge levels of reserves, while others struggle to receive enough to provide their statutory services. The formula is out of date, it doesn't recognise well enough things like rurality, sparsity and the unit cost of delivery in large and rural counties.

Can I thank Llyr for his contribution? Sadly, we've heard this a lot today, blaming austerity, blaming the UK Government, but the fact is that this has been devolved for 25 years. The money that flows to Wales is unhypothecated. That means it can be spent in any way the Government wishes. It is totally devolved, and choices can be made. Those choices of where that cake can be sliced and how it can be divided are at the discretion of the Government. The cake may not be big enough, but the reality is the current system gives crumbs to some and large wads of cake to others. That is morally wrong. We need to do something to change that, moving forward.

Mike was quite right, and I touched on some of that in my opening about school balances and other elements of the reserves. Mike's also right that we need to understand how the SSA, the standard spending assessment, is built, so that we can challenge it and analyse it further.

I have nothing but respect and admiration for our councils. The work they do is phenomenal. As a past leader for 13 years, I know how hard it has been for them, and it really hurts me when I hear people like Rhianon shouting that we don't understand local government. We do understand local government here, and that's why we're raising this really important debate today.

Janet highlighted again the need for a referendum, highlighting those issues in Conwy, with those high increases, as has Darren, recognising it's just not tolerable. We do need an opportunity for the public to be able to hold to account through a referendum to challenge those increases.

Tom pointed out the need for best value, and he demonstrated how many parts of Wales aren't necessarily given the best value for the money they take. The fact is the current funding formula is enabling unacceptable variances in councils' positions and allows unacceptable levels of reserves to be accumulated by several councils at a time when families face huge financial challenges. This is morally wrong. Yes, reserves should not be frittered away, and they shouldn't be used for recurring costs either, but they shouldn't be stacked up at a time of great need. We had a plan in the budget for how we could mobilise excessive reserves to create a sector-wide floor, to enable all authorities to maintain low council tax for a couple of years through this difficult period, and it wasn't taken on board. This is what we could have done; we could have actually achieved something here.

We do need Labour Ministers to stand up for the people of Wales by commissioning an independent review of the Welsh local government funding formula so that a sustainable future can be secured for councils and their taxpayers. We need the Welsh Government to review the levels of useable and earmarked reserves and work with the sector to mobilise excessive reserves to keep council tax as low as possible for the duration of these difficult times. At the end of the day, it's the hard-working people of Wales who will have to face the brunt of huge council tax rises, and that's why we also believe local authorities should be required to hold a local referendum when proposing an excessive increase in council tax before implementing such a rise.

To conclude, Llywydd, we urgently need to see a change in the local government funding system, ensuring people get value for money when it comes to their taxes. So, Llywydd, I ask Members today to support our motion.

Y cwestiwn yw: a ddylid derbyn y cynnig heb ei ddiwygio? A oes unrhyw Aelod yn gwrthwynebu? [Gwrthwynebiad.] Oes, mae yna wrthwynebiad, felly mi wnawn ni ohirio'r bleidlais tan y cyfnod pleidleisio.

Gohiriwyd y pleidleisio tan y cyfnod pleidleisio.

If I can just remind Members as well, if you have taken part in a debate, it is important for you to stay in the Chamber or on Zoom and listen to the debate being responded to, because you may well be named in that response, and you may well, sometimes, want to respond yourself. I think we all know who we're talking about. If some of you don't, then try and work it out.