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.