Senedd reviews committees recommendations on the Local Government Finance (Wales) Bill

The government disagreed with several of the recommendations made by the Local Government and Housing Committee and the Legislation, Justice and Constitution Committee, but accepted all of the recommendations made by the Finance Committee.

More information on the committees that scrutinised the Bill can be found in CIOT’s report here. You can also find the government's detailed response to all three committees’ recommendations here.

Summary of the debate

Here are the key comments from the debate.

Rebecca Evans, Cabinet Secretary for Finance, Constitution and Cabinet Office, said that the bill made “an important contribution to our wider local tax reform agenda in Wales”.

Evans welcomed the recommendations of the Local Government and Housing Committee, emphasising that the government had accepted the majority of these. But she argued that the committee's recommendations on regulation-making powers could be disproportionate and disadvantage taxpayers and businesses in Wales.

Evans also added that the proposal for a statutory review of the government’s power to make regulations was unnecessary, assuring members that the government would keep the power under review and assess its impact.

The Cabinet Secretary rejected the Legislation, Justice and Constitution Committee’s recommendations on the need for primary legislation.  Evans suggested that introducing separate primary legislation each time a tax change is required would also be impractical, unnecessary disadvantageous to Welsh taxpayers.

Local Government committee chair John Griffiths (Lab) argued in favour of further parliamentary scrutiny and called on the government to revisit its rejection. Griffiths also called on the government to ‘commit’ to statutory consultation arrangements to allay some of the concerns raised by stakeholders.

Alun Davies (Lab), Deputy Presiding Officer of the Legislation Committee, warned that a lack of scrutiny would be a significant issue for the parliament, noting that secondary legislation was not subject to the same level of scrutiny as primary legislation.

The Chair of the Finance Committee, Peredur Owen Griffiths (Plaid Cymru), argued that the full costs of local tax reform were uncertain thanks to the use of secondary legislation.

Griffiths argued for further scrutiny of alternative systems of local taxation and expressed concern that plans for more regular revaluations of domestic properties could become a means to increase council tax.

Sam Rowlands (Con) warned that frequent revaluations of non-domestic rates could put additional ‘pressure’ on  businesses and that the legislation would give more power to the Welsh government than to local authorities when it comes to the setting non-domestic rates.

Rowlands also expressed concern that the bill would be a “stepping stone for introducing higher taxes through the back door”. Rowlands also emphasised the importance of keeping digitally excluded taxpayers in mind before making any final decision on how to communicate tax changes.

Luke Fletcher (Plaid Cymru) highlighted the outdated nature of local taxation and called on the government to set out its position on alternative forms of tax, such as a land value tax.

Mike Hedges (Lab) supported the idea of more regular revaluations, saying they would help create a ‘fairer tax’.

Hedges described Council Tax as a “short term fix to deal with the poll tax” and that reform was needed to  “balance the tax burden on households…and has regular updates to keep the tax fair”.

Hedges also expressed support for a land value tax, describing it as ‘brilliant’. He warned that it “means you will never have any social housing in the expensive areas, because the value of the land would be such that people would not be able to pay the land value tax on it”.

Government response

Rebecca Evans reiterated that “none of the existing powers for Welsh ministers to provide for NDR reliefs, exemptions or setting the multiplier by regulations or council tax discounts are subject to the superaffirmative procedures”.

She argued that when deciding whether and how to consult with stakeholders, “we do take into account the Welsh government's policy on consultation and we do act in accordance with common law consultation duties” - a practice that the government will maintain. However, mandating statutory consultation in all cases could disadvantage Welsh taxpayers by potentially delaying or hindering new support measures, particularly those informed by the UK government's autumn statement, explained Evans.

The Cabinet Secretary reaffirmed that the bill won’t ‘take away’ power from the local authorities and on the contrary “extend the powers available to local government in the sense it removes that six-month limit on discretionary support for NDR”.

On the concerns around publicising council tax details in newspapers, Evans acknowledged members' comments but argued that ‘the way’ people receive information has now changed. She highlighted that every council taxpayer will receive a bill or a statement from the local government where crucial information could be included.

The Cabinet Secretary suggested that the government is exploring alternative models for council tax including a land value tax and will provide a roadmap in due course. She added “I think the crucial point is that it would have to be demonstrably better than the system that we have at the moment”.

Regarding the council tax reform, Evans explained that the government is currently analysing the feedback received from the consultation and will announce the next steps before the summer recess.

The bill progressed to its second stage on 17 April, which involves detailed consideration by a committee of the bill and any amendments proposed.

You can read the full debate here.