Which brings us to item 6, the debate on the local government settlement for 2018-19, and I call on the Cabinet Secretary for local government to move the motion—Alun Davies.

Motion NDM6623 Julie James

To propose that the National Assembly for Wales, in accordance with Section 84H of the Local Government Finance Act 1988, approves the Local Government Finance Report (No. 1) 2018-2019 (Final Settlement - Councils), which was laid in the Table Office on 20 December 2017.

Motion moved.

Diolch yn fawr, Llywydd. I'd like to continue in the same tone and approach that the Cabinet Secretary for Finance has adopted over the debates this afternoon in rooting our budget for local government in our values, our principles, where we stand and the approach that we wish to take. Presiding Officer, this is a budget that is rooted in a belief in local government. It is rooted in the belief that local government is valued by both this Government and by people across Wales. We want to work alongside local authorities to protect and enhance public services, to value public service workers, and to ensure that the place of local government in our budgets reflects these values and these principles. The finance Secretary, in introducing the Government's budget earlier this afternoon, outlined how austerity has undermined our ability to protect these services, but within this context we will continue to invest in local government and in local services.

Next year, local authorities in Wales will receive over £4.2 billion in general revenue funding. This is an increase of 0.2 per cent compared with the current financial year, and the second increase in the settlement for local government in as many years. Presiding Officer, we believe that this is a realistic settlement that will continue to protect local services from significant cuts against a background of reduced funding. The Welsh Government has protected funding for local government in recent years, and this settlement is no different. As a result, current spending on local services in Wales has increased by over 4 per cent between 2010-11 and 2017-18 in cash terms. In England, it has decreased by 12 per cent, and that is the real example of how this Government seeks to value public service, value public servants and value local government.

The distribution reflects the most up-to-date assessment of relative need, based on a wealth of information about the demographic, physical, economic and social characteristics of every authority in Wales. In preparing the final settlement, I've given careful consideration to the responses I received to the consultation on the provisional settlement, which closed on 21 November. This settlement provides councils with a robust basis for their financial planning for the coming financial year. Compared with the provisional settlement announcement, the final settlement includes an additional £20 million as a result of the Welsh Government's final budget allocations. Also, the final settlement includes a further £7 million to support the increase to the capital limit in charging for residential care to £40,000 commencing in April 2018. In addition, the final settlement provides an additional £1.3 million of funding to local authorities for them to use their discretionary powers to provide targeted relief to support local businesses that would benefit most from additional assistance. 

Within the settlement, we are prioritising funding for essential public services such as education and social care. Whilst there is no ring fencing on any specific element of the settlement, I am prioritising funding for schools, through £62 million in 2018-19 and a further £46 million in 2019-20 within the settlement to provide and to maintain the Welsh Government's contribution and enable authorities to maintain core spending on schools at current levels in both those years. Similarly for social care, I am prioritising funding, through £42 million in the next financial year and a further £31 million in 2019-20 within the settlement, to maintain the Welsh Government's contribution and to enable local authorities to maintain core spending on social care at current levels in both those years. This reflects our recognition of the need to invest and to continue to invest in social care.

As well as the funding I have already highlighted, this settlement provides an additional £6 million to support the delivery of local services to meet homelessness prevention duties, on top of the £6 million built into the settlement in the current financial year. Alongside the settlement, we are providing £600,000 to support local government to stop charging for child burials. This recognises and builds upon the positive steps already taken by many councils in Wales and puts in place a fair and consistent approach across Wales. Finally, over £800,000 of additional funding outside the settlement has been included to ensure that no authority sees a reduction greater than 0.5 per cent compared to the current general revenue funding allocation. Local government has continually asked for dehypothecation of specific grants and, in line with the direction of travel of previous Ministers, I have sought to continue this trend and will be looking to transfer further funding into the settlement in the future.

The settlement reflects over £92 million worth of transfers into the baseline previously paid to local authorities through specific grants. This includes £35 million from the waste element of the single revenue grant, £27 million of funding previously provided via the Welsh independent living grant, £19 million to support the social care workforce grant, £8 million to deliver the looked-after children programme, £3 million for carers' respite care grant, and £391,000 additional funding for social care for prisoners in the secure estate.

Would the Cabinet Secretary give way?

Of course.

I'm grateful. You mentioned the waste transfer grant. Of course, that was taken from the portfolio of his fellow Cabinet Secretary and given directly to local authorities. It could be said that that's been one of the most successful direct grants of Welsh Government in driving very high recycling targets and has been quite rightly praised by the Government itself as being one of the great successes in this field. What is he going to do to ensure that, although the principle of hypothecation is going, these successes continue? Because there does seem to be some work to be done with some councils.

I am familiar with that point. Let me say this: it's been a success because local government and Welsh Government have worked together. I think, in many ways, this has demonstrated the power of a partnership that is a real partnership working together, both in terms of funding but also in working together to look for different solutions to ensure that we do continue to meet the recycling targets that we have set ourselves. I see no reason for that partnership not to continue. The fact that we are providing the funding in a different way shouldn't affect the results of that partnership and should enable us to continue working but to do so in a way that also provides local government with the flexibility they require. The Member will know of my personal commitment and the commitment of the Cabinet Secretary on these matters, and we will continue to work with local government to ensure that those targets are met in the future. I can give you that undertaking today. But we will also ensure that the total annual funding of over £285 million has been transferred into the settlement since 2011-12. 

Alongside the settlement, Presiding Officer, I have published the latest information on Welsh Government grant schemes planned for 2018-19. This will assist local authorities in preparing their budgets for the next year. The most up-to-date information on local authority capital funding has also been released. Overall for next year, there's once again been no reduction to the general capital funding, which remains at £143 million. While the unhypothecated settlement is the largest single source of funding available to authorities, it is not the only one. In setting their budgets and council tax levels for next year, I expect every authority to take account of all of the available funding streams, and to consider how to secure the best value for Welsh taxpayers through effective and efficient service provision.

We offer considerable flexibility to authorities to exercise autonomy and responsibility in managing their finances. This is a fair settlement for local government within a very challenging circumstance, and within a sometimes difficult context. The finance Secretary this afternoon has expressed, I think, his own frustration with the situation that we find ourselves in, and the Welsh Government does not share the views expressed by the leader of UKIP this afternoon that austerity hasn't gone far enough, or achieved all of his ambitions. For us, there is a value in the public estate, public services and public service workers. We want to ensure that we provide excellence in public services for people across the whole of Wales, wherever they happen to be. We will continue to work with public service workers, with local government and other partners to ensure that we're able to do that. We will do it on the basis of mutual respect, and do it in a way that is rooted in our values today and in the future. Thank you very much. 

The Welsh Conservatives, of course, were delighted recently to welcome the announcement that Welsh local government revenue funding will receive an extra £31.5 million in 2018-19, and £61.7 million in 2019-20 as part of the Conservative UK Government's announcement of an additional £1.2 billion to Wales over the next four years. Wales is also benefiting, of course, from changes to the fiscal framework, meaning that for every £1 spent in England, at least £1.20 will now be spent in Wales, something that 13 years of Labour rule in Westminster never achieved. 

However, we have seen no let-up for our hard-pressed council tax payers or squeezed local government budgets, which now face real concerns over the lack of clarity over a number of funding streams. The Equality, Local Government and Communities Committee report on the draft budget called for greater transparency in funding presentation. Welsh Government claims of an increase to social care budgets to £42 million in 2018-19, rising to £73 million in 2019-20, and, allegedly, an extra £62 million, increasing to £108 million, in funding support for school services have been challenged by the Welsh Local Government Association, claiming it is already existing within the settlement, whilst the standard spending assessments has only gone up by just £35 million—pure rhetoric and spin by this Welsh Labour Government. 

Further, the Children, Young People and Education Committee revealed that the so-called additional £62 million in reality amounts to just £1.5 million when taking into account the initial calculation for 2018-19, and the final allocated figure. 

Our committee, the ELGC, further calls for the Welsh Government to outline how it intends to monitor spend and outcomes in areas previously in receipt of grant funding, now incorporated into the revenue support grant. Reductions of around £70 million in the cost of administering hypothetic grants are welcome and, to be fair, on these benches we've called for a less complicated and less bureaucratic way of funding local government. However, Cymorth Cymru have voiced concerns that without a distinct budget line, the Welsh Government simply cannot be held to account over how much actually is going to be spent on the Supporting People programme. Likewise, Bangor and District Women's Aid have stated that without ring fencing, they will not know how much is being spent on violence against women, domestic abuse and sexual violence. Clearly, there is a balance to be struck here between reducing hypothecation and retaining a transparent audit trail. So, therefore, I will be interested in the Cabinet Secretary's ideas for how this can be achieved. The Welsh Government have stated that information will be collected through a suite of expenditure returns in the interests of transparency, scrutiny and accountability. So, therefore, Cabinet Secretary, if you could advise as to when and where this data will be published and how you will report to the Assembly on this—.

Since 2013-14, local authorities have seen cuts of nearly £0.5 billion in real terms. Cabinet Secretary, you've said before that you've never seen an alternative to the funding formula, yet we've been calling for years for a fundamental review and improved consideration of a number of particular areas. Demographics: particularly the needs of older people, given concerns raised by the Health Foundation in terms of future social services pressures, and the need for adult social care funding to rise by 4 per cent in real terms each year to cover this. Rurality: again, our rural authorities have been badly let down. Why is the Labour Government not prepared to help our rural authorities? They have borne, yet again, the biggest brunt of your cuts, with real term losses of 14.5 per cent to Powys even before today's proposed settlement. Rural isolation and access to services are only partially addressed by the current sparsity factor. Therefore, again, we call for increased attention to be given to this element of the formula also.

Finally, we do need to look at how local authorities are actually managing their finances. We can't dictate how they budget, but we can enable better public and democratic scrutiny of local authority spending and use of reserves. The Equality, Local Government and Communities Committee has called for a review of the implementation of the guidance on local government reserves, a call disappointingly rejected by this Welsh Government. Whilst our residents continue to face hefty year-on-year council tax rises, potentially 12.5 per cent in Pembrokeshire, and high increases across Wales, whilst usable reserves have risen 7 per cent since 2012 and represent 86 per cent of total reserves totalling over 1.4 billion, there is a clear mismatch, Cabinet Secretary, and I actually think that you have some sympathy with my thoughts on that.

Clearly, Cabinet Secretary, we do look to you now to bring some sense to this ludicrous situation. Rhondda Cynon Taf alone has usable reserves of almost £150 million. A council tax increase for our residents of 187 per cent since Labour came into power in Wales shows that Welsh Labour are more than happy to burden our householders, many on fixed incomes, rather than balance their own books here in Cardiff Bay.

Since 2010 local authorities across Wales have been working in a very difficult financial climate as a result of the destructive austerity policies of the Conservative Government. This means that local services have been lost and the most vulnerable in our communities are being affected most. Following years of cuts to local government budgets in Wales—a cut of 1.4 per cent in 2016-17 and 3.4 per cent in 2015-16—as part of the agreement for the budget last year, Plaid Cymru did ensure an additional £25 million to fund local authorities. As a result of that agreement, in 2017-18, a number of local authorities in Wales saw an increase in their budgets for the first time for some years. But despite this additional investment, following other factors such as inflation and increasing pressure on greater services with regard to social care, despite that additional investment, that settlement was a real-terms cut to some local authorities.

And that's the truth for this year as well. The final settlement includes increases and reductions in funding for different local authorities, with nine authorities facing a cut, and 13 authorities seeing an increase of some kind in financial terms. Local authorities have saved more than £700 million since the beginning of austerity in 2010. But, truth be told, this settlement still doesn't give sufficient funding for councils for a number of the Government's priorities, including a pay rise for public services and local authorities. And this means that it will be more difficult to employ in the care sector and services across the board.

So, even though this settlement is less damaging to authorities than previous ones, the Government has to look to the future and think about building resilience into the system, and a more sustainable system in the way that they fund local government. For example, the Government announced last week decreases for council tax relief, which is worth £244 million a year. Council tax relief schemes are vitally important for the vulnerable people of Wales. But, by introducing a fairer taxation system in the first place, we could be in a situation where such a relief scheme wouldn't be needed, or such a wide-ranging one as we currently have. If we could introduce a fairer taxation system, we could save money in that particular area, and this could release greater funds that could be used for front-line services within our local councils.

Of course, we all recognise and appreciate that these are vital services. We also acknowledge the tireless work being done by staff in local councils. We often in this place laud the staff of the NHS, and clearly we have to do that and we need to do that. But we also have to recognise that workers in the care sector and other sectors within our local authorities also work under continuing pressures, and the tireless work that they do is to be praised. Their commitment to the services that they try to provide for the people of Wales must be appreciated by all of us. But seeing the increasing pressure that is on the staff is heartbreaking, and it's also heartbreaking considering that it is the most vulnerable people in our society who are dependent on these services, and that it's them, ultimately, who will be hardest hit by all of this.

Yes, we have to put an end to austerity—of course we have to put an end to austerity. It's clear that it isn't working, despite all of the impact that it has on our communities. But also, this Government needs to take responsibility and to accept responsibility for working on new ways of creating systems that are balanced and sustainable for the future. Thank you.

I agree with Siân Gwenllian that we need to look at new ways of dealing with the austerity budget that the UK Government hands down to us, but I want to just focus on the particular problems that Cardiff faces as a result of the way in which the education improvement grant has been absorbed into the overall rate support grant.

Not only is our local authority having to cope with a reduction of 11 per cent in the education improvement grant, it is of great concern to me that the money that this local authority and other local authorities, like, for example, Swansea and Newport, used to get for Travellers and minority ethnic pupils has disappeared in a puff of smoke. That is of huge concern, because Cardiff is a dispersal centre for refugees, so we obviously are very pleased to accept a significant number of children who have absolutely no English when they arrive, but we obviously need to put in place the services to integrate them into our mainstream schools.

So, what was a modest 0.9 per cent increase in the education improvement grant, bearing in mind that we have an increasing population of young people in Cardiff, has turned into a small reduction in the overall education improvement grant, with the increasing numbers in the population of schoolchildren we have. That translates into a massive £4 million gap in Cardiff's education budget, and in one particular school, in Fitzalan in Mark Drakeford's constituency, £400,000 will be lost. In other schools, it's going to be 6 per cent or 7 per cent of their total school grants. So, I do hope that the Cabinet Secretary for local government will give us some assurances that this money is going to be for those local authorities that actually are educating ethnic minority children, not for local authorities where there are almost no minority ethnic and Traveller children. So, I'd be grateful for some clarification on that.

Mike Hedges.

Oh, diolch, Llywydd. [Laughter.] That came as a shock then.

Two major areas of Welsh Government expenditure are health and local government. The downside of extra money for health has obviously been less money for local government. Local government finances are under pressure. Local councils have been forward thinking and innovative in dealing with real-term cuts to their budgets, and that's councils led by every different party: they've had to work hard to deal with incredibly difficult financial positions.

Whilst real-term reductions in Wales have been substantially less than in England and less than in Scotland, they have created difficult decisions for councils to make. As I've stated regularly, social care is under greater pressure than health in terms of finance. Without adequate social care, we end up with patients unable to be discharged from hospitals. We see that in England, where it has been stated that, at one time, one hospital had more delayed discharging than the whole of Wales. Also, in England, we have seen the wholesale closure of libraries. The English education system has become fragmented and chaotic.

We in Wales have avoided this. In the provisional settlement, the Welsh Government guaranteed that no local authority will have to manage a reduction of more than 1 per cent. The final settlement is better and ensures that no local authority in Wales will have to manage a cut of more than 0.5 per cent in cash terms, although, of course, if it's 0.5 per cent in cash terms, it's going to be a far larger cut in real terms.

The final settlement represents an additional £28.3 million in funding for local authorities in Wales compared with the provisional local government settlement. We've got to be happy with that. We're moving in the right direction: £20 million is for general use and £7 million is a manifesto commitment to increase the capital limit when charging for residential care and raising that to £40,000, commencing from April 2018. I wonder how many people will be voting against increasing the limit for charging to £40,000. When you vote against this, that's what you'll actually be doing. Then, an additional £1.3 million funding for local authorities to use their discretionary powers to provide targeted relief to support local businesses that would benefit from additional assistance.

An issue my local MP Carolyn Harris has campaigned on for most of the last two years has been free child burials, and there's £600,000 for that, which has allowed councils to do that. It is not a huge sum of money, but it'll make a difference to people's lives and for those people who have the huge misfortune to lose their child, they won't face the huge financial cost that will come alongside the tears and the upset of the death of a child. The death of a child is severe enough for a family, one that most of us hope, or perhaps even all of us hope, will never happen to anybody we know or any of our family. When that has happened to somebody, giving them a financial pressure as well, I think, is something that—. Ending that is something the Welsh Government deserves a pat on the back for.

The local government formula can be easily changed. You just change the percentage numbers. But with no extra money, every local authority that gets more money will mean some other local authorities getting less. And while the formula may need—

Will you give way?

Yes, certainly.

How can you justify a situation where, for example, Flintshire in nineteenth position gets £368 less per head in revenue for local government than the best funded authority? Wrexham is eighteenth. Conwy is fifteenth, despite it having the largest oldest people population in Wales. Even Anglesey, the poorest or least populous part of Wales, is the eleventh lowest funded. That is an unsustainable formula, surely.

If Mark Isherwood is asking, 'Can we fund every local authority by exactly the same amount per head?', on behalf of Swansea, I say, 'Yes, please.' And I think there'd be people in Cardiff who'd be ecstatic about it, and there'd be problems in other parts of Wales where they'd be less happy.

The formula means that it's driven by population, and population demographics, with additional money for sparsity and deprivation. One of the problems with some of the local authorities who have been losing money is that their population, relative to the rest of Wales, has been decreasing. Cardiff has done well this year because its population relative to the rest of Wales has been increasing. And all those people who say, 'We don't want any building in our area; we don't want any development', well, you're going to then have the corollary of that, which is that you're not going to get as much money in local government settlements.390

Can I just say that, no, Cardiff and Swansea do not get a penny for the regional services they provide? The settlement will leave local authorities with difficult decisions. Can I—? I'll leave with two requests. One is for the Welsh Government, and that is: can they free local authorities to set their own charges for planning applications? This is something that is set centrally. Some local authorities would want to charge more, some would want to charge less, and some would want to make planning a situation where it washes its face in terms of income and expenditure. The other one is: will people in this Chamber stop complaining when local authorities make the cuts that we are forcing upon them by our real-terms cuts in their expenditure, when they've got the huge pressure they've got on their budgets, especially social care? People are going to vote against the budget today, but how many will be voting against the budget because they think more money should be going to local government and less to health?

Not so long ago, Cardiff's Labour council closed my local youth centre. So, now, if you walk around my area, you'll see—[Interruption.] Some people to my right in the Labour group are actually laughing at that statement, which is shameful. If you come—. I'll declare an interest; I'm a Cardiff councillor. If you walk around my community, you will now see youngsters out on the streets when at other times, previously, they would have found themselves in the youth centre, which the Labour Party closed.

If you walk around the city centre, you will see more and more homeless people—more and more. The administration of which I was a deputy leader introduced taxi marshals because of the number of flashpoints and violent confrontations that arise out of disputes over taxi ranks. We hear, this week, that in this city now, taxi marshals will be abolished. The city centre will therefore be a less safe place, and it's going to be particularly difficult for differently abled people to catch taxis, and they already have a very, very difficult time.

Services are more and more squeezed, and what's on offer? More of the same. More of the same—year in, year out. Local government is not respected enough, and it's certainly not funded enough. I look at these debates in this Chamber. I look at how the Government's spending its money. The black routes, making consultants wealthy, almost, with the number employed. The waste from this Government is, and has been, enormous. And yet, councils will suffer.

We won't let councils completely off the hook, because if you look at many of the councils in Wales, they pay huge salaries in excess of £100,000 to officials. Look at commissioners in Wales. The well-being of future generations, for example. That whole department spends millions. On what? I don't think anybody really knows. And there's a whole drive of outsourcing from the Labour Party—especially to private charities—who will not fund local government, with democratically accountable councillors. Every single year. Every single year, this Government condemns councils up and down Wales, and it simply isn't right.

I call on the Cabinet Secretary for Local Government and Public Services to reply to the debate.

I'm grateful to you, Presiding Officer. I am grateful to all Members who have taken time to contribute to the debate this afternoon. It's always important to consider how we structure the funding and financing of local government, and also the relative priority given to local government within the overall Welsh budget.

Can I just say this? There is not simply respect and mutual respect for local government in this Welsh Government—and, I believe, across the Chamber, in fact—there is also a wish and a want to work together, to collaborate together, to work in a real, not a pretended, partnership together. The question from Simon Thomas during my opening remarks spoke to an area where we've been successful in achieving our ambitions. We've been successful, not because local government succeeded or the Welsh Government succeeded, because we succeeded together and we worked together. That is what I want to see today and in the future.

Can I say, Presiding Officer, I do listen to, particularly, Conservative spokespeople talking about the formula, and talking about its relative weaknesses? But let me say this: Mike Hedges is absolutely right in his analysis; the formula can be changed. It can be changed. I've heard many Conservative Members here arguing for a change in the formula. What I haven't heard is Conservative councillors arguing for that change in the formula. You know, I will say to the Conservative spokesperson, we had a meeting of the finance sub-group on 14 December, where we met with local government to discuss this settlement and that formula, and they weren't proposing changes to it. I'll give the Member an opportunity now. We have a meeting next week. If she wishes the Conservative Party to propose changes to the formula, you have a meeting next week—I believe it's next Wednesday or Thursday: propose those changes. Let's see what the changes are. Let's see what you want to see. Let's see how you believe the funding should be distributed. And then let's see if you can find a Conservative councillor who'll propose it. Because when I talk to Conservative councillors, what they aren't talking to me about is changing the formula. They're just saying they're very grateful that their councillors in Wales are not councillors in England, where they've seen their own Government contemptuously not just dismissing local government, but systematically dismantling local government. [Interruption.] I'll give way to the leader of the opposition if he wants me to. I give way to the leader of the opposition.

Do you stand there and feel ashamed of the record increases in the council tax that have happened since the start of devolution here in Wales, and the little respite you've given, in particular, to rural authorities to meet the demands of extra services you've placed on them? 

I look forward to the leader of the opposition's letter coming to me this week or next week with the changes he proposes to the formula. [Interruption.] I'll put it in the Library, with his permission. But I gave him the opportunity there to defend local government and to say how important local government was. What he did was to attack the decisions of local government and to attack the decisions of locally elected councillors.

One of the points that was made by Mike Hedges in his contribution was about the difficulties facing local authorities in balancing the books and delivering excellence and services. Let me say this: I absolutely agree with the points that he made in that contribution. Being a local councillor and a local authority leader today is one of the hardest and most difficult jobs in Welsh Government, and we should be thanking local government leaders for the work they do and not condemning them, as the leader of the opposition has done, for the decisions that they take.

We have an excellent track record in supporting local government in Wales and, Presiding Officer, I hope, and I'm confident, that that will continue. We know that, since 2010-11, in England, in real terms, local government has been cut by 22 per cent. In cash terms, a 12 per cent cut in local government in England. In cash terms, over the same period, we've seen an increase of 4.4 per cent in Wales. We know that spending per head in Wales is £527 per person higher than in England. We know that we are investing in local government, and we know that we're seeking to protect local government.

But the points made by Siân Gwenllian are also absolutely right. There is a crisis of public finances in this country. It's caused by a failed austerity project that was established in order to pay off the deficit, but has doubled the deficit. It was established in order to pay off the debt. It hasn't succeeded in doing that. What it is doing is leading to a dismantling of local government in England and a decline in the ability to deliver public services. That is not something that I would ever be proud of.

Let me say this to other Members who took part in the debate: the points made by Jenny Rathbone, I think, are absolutely right for her to raise. I will say to Jenny: Huw Thomas, the leader of Cardiff council, raised these matters with me last week, and I'm also aware that the leader of Swansea has written to the Cabinet Secretary for Education. I know that the Cabinet Secretary will be replying to the leader of Swansea, and we have asked our officials to work with both the leaders of the councils you've named, but also with the WLGA, to try to resolve the issues that you raised. It's absolutely fair and right and proper that we raise those issues.

But let me say this in closing, Presiding Officer: it is the easiest thing in the world to come to this Chamber and to make a speech. You can condemn either the decisions of this Government or condemn the decisions of local government, and different people have taken the opportunity to do that this afternoon. But let me say this: this is a Government that respects local government. It's a Government that wants to work with local government. It is a Government that will seek to protect local government, public services, and public service workers. It's what we're doing this afternoon, and I would ask Members in all parts of this Chamber to support the Government in doing that today. Thank you.

The proposal is to agree the motion. Does any Member object? [Objection.] I will defer voting on this item until voting time. 

Voting deferred until voting time.