Wales is making great strides in reforming local government finance
Local Government across Wales needs to be supported and empowered so that our local councils and police bodies can continue to deliver local and national services to their communities. This is the message from Finance Minister Rebecca Evans, as a summary of findings on reforming local government finance in Wales is published today.
The paper brings together expert-led research commissioned by the Welsh Government over the past five years to understand the options for making local taxes more progressive, whilst still maintaining vital revenue for local services.
As well as exploring more radical alternative approaches such as land value tax and local income tax, the paper also considers the options for making significant improvements to existing systems and provides a robust basis to inform proposals over the next Senedd term.
Recognising that such reforms should be considered carefully, the Welsh Government has already taken important steps to develop a fairer council tax system in Wales. Working closely with local councils and the Welsh Local Government Association (WLGA), new legislation to remove imprisonment for non-payment of council tax was introduced in 2019 and a more citizen-focused system for managing debt has been developed. The Welsh Government has also worked with MoneySavingExpert.com to improve access to discounts for people with severe mental impairments and encouraged low-income households to take up its Council Tax Reduction Scheme, mitigating some of the effects of Universal Credit. Young care leavers have also been exempted from council tax.
The paper also reflects on the steps taken to support businesses and other ratepayers, including providing significant targeted rates relief for small businesses, high streets, hospitality and leisure sectors, and childcare premises. In light of the pandemic, decisions have also been taken to freeze non-domestic rates increases next year to ease the pressure on already struggling businesses.
Finance Minister Rebecca Evans said:
“The paper I have published today focusses on the future of local taxes, council tax and non-domestic rates, reflecting on a number of key research studies that have been carried out this term and provides a robust basis to inform proposals over the next Senedd term.
“It is clear the scale of work to radically reform the system would take time and careful management to ensure that local government continues to sustain vitally important revenue streams.
“Whatever approach is adopted in the future, one thing is clear, we must continue to support and enable local government to go on delivering better local services for everyone: to provide the best foundation in early life, to help those who need it most, and to tackle poverty by creating a thriving economy which benefits everyone fairly.”
Cllr Anthony Hunt, WLGA Spokesperson for Finance and Resources said:
“Both the Council Tax and Business Rates raise over £2.5bn for local public services and provide a vital funding stream for the things our communities rely on. The Finance Minister is right that any reform will take time and should be fair to those who pay taxes as well.”