Item 7 on our agenda this afternoon is a debate on the local government settlement of 2019-20, and I call on the Minister for Housing and Local Government to move the motion—Julie James.

Motion NDM6903 Rebecca Evans

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) 2019-2020 (Final Settlement—Councils), which was laid in the Table Office on 19 December 2018.

Motion moved.

Thank you, Deputy Presiding Officer. It is my responsibility to present the 2019-20 local government settlement for the 22 unitary authorities in Wales to the Assembly. In undertaking this role, I follow a long line of local government Ministers who have addressed this Assembly. We've all the understanding that Wales and all its communities can only achieve their full potential when there is a lively local democracy engaged with local communities.

We need dynamic local authorities that can attract investment, enhance local environments and ensure the care that we all want to give to each other. In this context, I take no pleasure in proposing to this Assembly that, in 2019-20, the increase in the general revenue allocation to Welsh local authorities will be 0.2 per cent. I know this will challenge local authorities to continue to do more with less, and I applaud their record of doing just that over the past decade of austerity. I have no doubt that Assembly Members have come to this debate prepared to make the case for more resources for local authorities. Assembly Members want to allocate more money to their communities, I fully understand that, but, unfortunately, the Welsh Government cannot manufacture that resource.

We heard in the earlier debate on the final budget that, in the last decade of austerity, the Welsh budget has declined by £850 million in cash, a 7 per cent decrease in real resources. Whilst over the decade we have gone to significant lengths to protect the local government settlement, inevitably, Welsh local government suffers from the effect of a UK Tory Government with an ideological commitment to reduce the size of the state. We have a robust partnership with local government in Wales in which we work together to allocate the limited resources available. I pay tribute to those in local government and my officials in Welsh Government who have worked hard together to allow me to propose this settlement. And to my predecessor, Alun Davies, actually, who also worked very hard in getting this settlement to the point where I took it over.

Next year, local authorities in Wales will receive over £4.2 billion in general revenue allocations from core funding and non-domestic rates. This is an increase of 0.2 per cent compared with 2018-19. The distribution of this funding reflects the most up-to-date assessment of relative need based on information on the demographic, physical, economic and social characteristics of every authority in Wales. In preparing the final settlement, the Government have given careful consideration to the responses received to the consultation on the provisional settlement that closed on 20 November. We have also listened to the evidence given by the Welsh Local Government Association during budget scrutiny. The original indicative settlement for 2019-20 projected a decrease in cash of 1 per cent, a decrease of £43 million. Local authorities rightly pointed out the scale of challenge this posed and the impact on services people need and value.

We have made a range of further allocations to the local government settlement to mitigate the reduction that local government have been expecting. In the draft settlement announced on 9 October, we set out further funding of £43 million. This recognised in particular the priority we and councils give to social services and education and the specific pressures and costs these services face from increased demand and pay costs. Compared with the provisional settlement, the final settlement for 2019-20 includes an additional £23.6 million as a result of the Welsh Government's final budget allocations. This includes £13 million to support local services overall, recognising the responses to the consultation and the representations made by Assembly Members; £1.2 million to provide an improved settlement floor; £7 million a year recurrently to support the increase to the capital limit in charging for residential care to £50,000 from April 2019—this concludes the delivery of our programme for government commitment to raise the capital limit in charging for residential care to £50,000 two years ahead of schedule—and £2.4 million to provide additional discretionary rates relief for local businesses and other ratepayers to respond to specific local issues. This is in addition to the extension of the high street rates relief scheme.

The additional funding means that the Government has been able to further revise the floor arrangements so that no authority now faces a reduction of more than 0.3 per cent compared with the current year on a like-for-like basis. This £3.5 million floor is fully funded by the Welsh Government. When we have asked local authorities to operate with less real resource, we have recognised that this is best achieved by balancing the unhypothecated revenue support grant and hypothecated grants to deliver outcomes in the most effective way. We are continuing to do this, and the settlement includes £20 million to help meet the increased demands for social services, as well as the £30 million specific grant.

We are pleased that the UK Government has indicated that they will take more time to assess and evaluate their plans for the managed migration of legacy benefit claimants to universal credit. We await further details of the pilot phase. We understand, at this point in time, that the UK Government still intends to roll out universal credit by December 2023.

In line with the proposals in our recent consultation, we are making an additional £7 million available to local authorities, through the settlement, for free school meals in 2019-20. This will support local authorities in meeting the costs associated with our proposed threshold and transitional protection measures. We have also provided funding for additional costs arising from changes by the UK Government through the teachers' pay award. We are directing all of the £23.5 million announced by the UK Government on 13 September to local government. For 2018-19, £8.7 million will be made available via specific grants, £13.7 million has been included in the settlement for 2019-20 for maintained schools from nursery to year 11, and the remaining £1.1 million will continue to be delivered outside the settlement as a specific grant for teachers in school sixth forms for years 12 and 13. We're also providing £7.5 million outside the settlement to help local authorities meet additional cost pressures associated with implementing the teachers' pay award. 

Turning to general capital funding, local authorities will have an additional £100 million in general capital grant over the next three years—sorry, Mike, I didn't hear you.

You've spoken a lot about teachers' pay, which I think everybody's very pleased about. You haven't mentioned teachers' pensions, which is—

I'll be coming on to that shortly.

Okay.

Turning to general capital funding, local authorities will have an additional £100 million in general capital grant over the next three years: £50 million in 2018-19, £30 million in 2019-20 and £20 million in 2020-21. The general capital funding for 2019-20 is therefore increased to £173 million. This provides clarity and certainty on future funding for authorities' own capital spending priorities for the medium term. In addition, we are providing £60 million over three years for a local authority public highways refurbishment scheme. This is to help repair the damage caused by a series of hard winters and this summer's heat wave.

On 3 October, we announced that we are amalgamating a number of grants and we will be establishing a children and communities grant and a single housing support grant from 1 April 2019. This brings together 10 specific grants into just two schemes, introducing flexibilities for local authorities and helping to reduce the administrative burden associated with grant funding. By balancing increases to the unhypothecated and hypothecated grants to deliver outcomes in the most effective way and simplifying the specific grants, we are allowing local authorities to manage their limited resources in the most flexible way.

Sorry, I've just realised, Mike, that I was thinking of covering off the point that you raised in my closing remarks, but just to say that we will be covering it there if it's not raised in questions.

In conclusion, I am not claiming that this is a good settlement for local government; I'm claiming that it is the best possible in the circumstances of the continuing decline in the Welsh budget. The distribution and the priorities in the settlement reflect the hard work that goes into our partnership with local government and the scrutiny provided by the Assembly. I therefore ask Assembly Members to support the motion. Diolch.

The Llywydd took the Chair.

Whether delivering preventative services, driving forward the local economy, providing education, social care and leisure centres or collecting bins, resilient local government is essential. The Welsh Local Government Association described the initial local government settlement as, quote:

'a deeply disappointing outcome for councils across Wales with the gravest implications for...services'.

In a letter signed by representatives from each political group, the WLGA Conservative group leader, Councillor Peter Fox said:

'With £370m new monies arriving from Westminster, an imaginative approach to funding preventative services to keep people out of hospitals was needed. Instead, the Welsh Government has given the NHS a 7% increase and cut council budgets'.

And he subsequently said 

'This budget is full of tired and outdated thinking.'

He also warned that this was becoming a false economy.

With a clear north-south divide, all six north Wales councils would've received a cut of at least 0.5 per cent and three a 1 per cent cut. Responding to the subsequent Welsh Government announcement that, thanks to extra funding from the UK Chancellor, the funding floor had been raised from -1 per cent to -0.5 per cent and that an additional £13 million would take the Welsh average to a flat cash settlement, the WLGA leader stated, quote:

'Despite this welcome announcement, there is no doubt that this remains a particularly challenging financial settlement'. 

With the exception of Denbighshire, which now receives a flat settlement, all north Wales councils receive a cut, with the largest cuts in Flintshire, Conwy and Anglesey, alongside Monmouthshire and Powys at 3 per cent. So, those councils receiving the lowest per-person funding under the Welsh Government's flawed formula are again hit hardest, and council tax payers, who already pay a higher proportion of their income on council tax than in any other UK nation, will have to bear the burden.

Welsh Government Ministers have long deflected the blame by stating that councils in England are worse off than councils in Wales. What they don't state is that it's impossible to make this comparison, because local government funding policy has diverged significantly between the two since devolution, with, for example, direct funding for schools in England only. They don't adjust their figures for that or anything else, because, of course, they are simply here to react against UK Government rather than governing in the best interests of Wales. They also dodge the fact that for every £1 spent by the UK Conservative Government in England on matters devolved in Wales, £1.20 is currently given to Wales. Furthermore, the Trade Unionist and Socialist Coalition, Jeremy Corbyn's own cheerleaders in chief, recently said that

'no Labour-led council has insufficient reserves that it could not use to generate the resources for a no cuts budget for 2019-20.' 

Well, in Wales, Labour councils receiving the highest settlement in this budget are sitting on over £800 million in usable reserves.

Although the Welsh Government had hailed this budget as having a focus on prevention, their delivery has failed to spend better on prevention and early intervention in order to improve lives and save money. Although an additional £30 million has been allocated to regional partnership boards to deliver joined-up preventative care and support, this sits outside the local government revenue support grant, leaving councils with little ability to invest in these services. Further, there have been a range of real-terms cuts to public health and prevention programmes, and to third sector organisations delivering key preventative services. And third sector representatives on regional partnership boards have reported that the third sector has been seen as a bit-part player with little or no strategic involvement.

The local government funding formula, which has not been independently reviewed for 17 years, is overly bureaucratic, complex and outdated. In November, Labour-led Flintshire council launched its #BacktheAsk campaign in full council, and received unanimous cross-party support to, quote, take the fight down to the local government department in Cardiff to get a fair share of national funds.

In a joint letter to the Welsh Government, their leader and chief executive said the 

'disparity in formula-based funding...inevitably creates a wide variation in the financial risks to councils in Wales. Flintshire is at the extreme end'.

Its leader subsequently stated the council is seeking a recognition of how the formula impacts on the council's low-funded position, where compared to the majority of councils in Wales, and in a letter yesterday, he said that Flintshire is a low-funded council at nineteenth out of the 22 councils, despite being sixth largest in population terms, pointed out that the Welsh Government has received an extra £33 million following the recent Chancellor's budget, and asked that this be distributed to councils. I will finish, therefore, by quoting a Labour council representative.

There's no doubt that this has been a difficult settlement for local government in Wales, as Rhun ap Iorwerth said earlier. The core grant for local government has fallen 22 per cent since 2009-10. I was a county councillor in Swansea for several years, as others in this place were, and the pressure on our counties was clear then. It's deteriorated significantly in recent years. Talking about Oliver Twist is not a fitting response to this crisis either.

And the impact that this has: well, we heard last week in the debate on social care funding about the challenges that face social care. Funding care comes under the auspices of local government, and expenditure on social care has remained flat since 2009-10, despite the increase in demand for services and the increase in staffing costs as well—increases in pensions, wages and external contracts. And some care charities, locally, are returning contracts to the counties because of lack of funds. The result of lack of funds is that the threshold to receive a service increases every year, with the result that our older people, vulnerable people, lonely people often don't reach the threshold, so they don't receive any services at all. 'Well, no problem', you might say, 'Pay for it', as we heard last week, but that isn't a choice for a number of our older people, without money, without family, who are lonely, and people are dying as a result of the lack of care. Twenty-two thousand people are dying beyond the expected level annually because of a lack of care in England, and when there is family, the pressure is very heavy on those voluntary carers. That's the result of the funding decisions and cuts to services, and a lack of care services in the community mean that people have to remain in expensive hospital beds as well, and, as I said last week, care deserves the same response as health does, namely a national care service funded from general taxation with salaried, talented staff who are registered exactly in the same way as doctors and nurses in the health service.

Now, I'll turn to education as well. As chair of the governing body of a primary school in Swansea for several years now, I see on a daily basis that our schools are under a great deal of pressure as well, with wage increases—deserved wage increases—for our teachers, increases in pensions for teachers as well—very much deserved—but the funding doesn't flow down from the United Kingdom Government nor does it come from the Welsh Government, and that doesn't pay for these deserved increases. The decisions are being made, but the funding doesn't follow as a result of those decisions, and especially in terms of pensions. And with pressure on the budgets of our counties, the reserves held by our schools are being eroded very swiftly. Now, these are, indeed, hard times for local government. We can't support this. We will be voting against the motion. Thank you.

The local government settlement has improved from the draft to the final. Unfortunately, this change is only from disastrous to bad. I intend to quote the views of a local headteacher and then make five proposals on what can be done to help the situation in local government. The headteacher says:

'I am writing to you to highlight serious concerns I have about the school funding crisis and to enlist your support and commitment towards securing a review of arrangements which would lead to all schools in Wales being funded sufficiently, equitably and transparently. The stark choices I find myself faced with looking ahead to April 2019 are going to be a challenge. The risk to learner entitlement, particularly the most vulnerable, posed by the year-on-year real-term reduction in funding is now at crisis point.

'In recent years, it has become apparent that, despite the best management, our school budgets are not sufficient. We are increasingly unable to deliver core services to the ideal standard and in some instances, not even able to meet statutory requirements. For example, some schools no longer have a qualified teacher in their Nursery class. Neither the headteacher nor the deputy headteacher are provided with their statutory management time allocation, and spending on learning resources and school premises maintenance programmes is negligible.'

Clearly, this situation is unsustainable, and you've also got headteachers covering for absent staff to avoid supply cover.

'Furthermore, support staff levels have been drastically reduced, meaning that vulnerability risks aren’t being as keenly addressed as they need to be, with this development also inevitably impacting on the quality of provision and workload of remaining members of staff.  All of this is happening at a time when Wales’ new curriculum and the ALN provision, both of which have the potential to be world leading ventures this should be being celebrated globally.'

So, this is from a headteacher who's actually on the side of the Welsh Government in what they're attempting to achieve. 

The national mission statement for a high-quality education profession to teach our children—. In Swansea, the number of classes taught by unqualified teachers has increased, class sizes are increasing, the needs of ALN pupils are not being met, and vulnerability factors such as those resulting from poverty and deprivation are not being addressed as they should be.

Education improvement grant—it does not even provide enough funding to satisfy foundation phase recommendations. The number of schools able to meet the recommended adult-pupil ratio in foundation phase, 1:8 in nursery and reception and 1:15 in years 1 and 2, has decreased. 

The National Assembly’s research briefing entitled ‘School Funding in Wales’ highlights the following facts. Between the academic year 2010-11 and the current academic year 2018-19, local authority gross expenditure on schools has decreased in real terms by just under 8 per cent. The average amount local authorities spent per pupil in 2018-19—whilst being £266 higher than that spent in 2010-11—is a real-term decrease of 7.5 per cent. This is further illustrated in a recent review of the funding experiences of school leaders.  The National Association of Head Teachers found that seven out of 10 school leaders think that their budgets will be unsustainable by the 2019 academic year. This is an alarming situation that has reached crisis point. 

Further pressures facing schools include significant cost pressure as a result of the teachers pension scheme increasing in 2019-20 from 16.48 per cent to an estimated 23 per cent.  This represents an unfunded £3 million cost pressure on the delegated schools budget in Swansea alone. It rises to £5 million in 2020-21. The Treasury select committee has called upon the UK Treasury to resolve this issue and release the funding required to Wales from the UK fund that has been established to address pension pressures.

The cost of teachers' pay as well as other cost pressures facing schools, such as from the additional responsibilities under the ALN Act, must be fully funded in the final local government finance settlement, ensuring that the core funding required for a future sustainable statutory education provision is appropriately funded as a priority, such as class size reduction, and that local government in future receives a fairer share of the resources available to the Welsh Government.

The cost to schools in reduced delegated budget levels in Wales's third-tier governance—with confidence in regional consortia at an all-time low, the impact on learner outcomes of this expensive additional layer of governance really must start to be held up to scrutiny. As a nation, we need to be assured that this additional activity is securing at least the same if not better levels of impact as the extra teachers would have, were this funding being directly allocated to schools. 

I have suggestions: one, that the Welsh Government continues to put pressure on Westminster for the increase in teacher employer pension contributions to be met; two, I believe that regional consortia are a waste of scarce resources. I accept I could be wrong. Test it—delegate the money for the regional consortia through the schools, and if they value the regional consortia that much, they'll pay into it. If they don't, they'll keep the money for the schools. That the transport grant given out to projects that are bid for during the year is distributed to councils to support current activity via the transport grant. That the additional money put into education allocated for training is given to local authorities to pass on to schools to use at they believe best. That additional funding for implementing ALN is provided from the health and social services budget.

I don't expect most, if any, of those—apart from the one about the pensions—to be accepted, but I hope people will look at those because they are a means of not asking for extra money just asking how the current money can be used better. 

I’ll begin again by saying that there’s no doubt that the settlement before us today is an opportunity missed to lift some of the pressures off the shoulders of local government, which, in turn, would have had a positive impact on public services more broadly, following years of ongoing austerity. It is clearer than ever, I believe, as we’ve heard from a number of speakers already, that our councils can’t continue to operate effectively given the current financial climate. A shortage of adequate funding is certain to have a direct impact from hereon in on areas that, to all intents and purposes, have been protected to this point—education and social services are two that are foremost in my thoughts.

A failure to spend sufficiently on social services has an impact on health budgets, and by cutting the funding of crucial preventative services, it increases pressure on the health service. And, of course, on the face of it, hardly anyone would disagree with the approach of providing more funding to the health service, but doing that without taking into account the interdependency between health and local government helps no-one. It is short-termist in essence.

I would want to see the way that budgets are planned across various areas and how they overlap with strategic purpose changing. We need a government with a very clear vision to do that, with a focus on the long term and a willingness to bring strands of government and public services together, and that’s not what we’re seeing at the moment, I’m afraid.

I’m very disappointed to have to report that I haven’t received a response to a letter that I wrote jointly to the finance Minister and the education Minister before the final budget was laid, asking at the eleventh hour that the Government look again at a means of reducing the burden on our councils. Over the past months, in education specifically, I've received correspondence from council officials, heads and governors of schools—and I declare an interest as a governor myself at Ysgol Gyfun Llangefni—and I have been contacted by parents and people in the additional learning needs sector who are concerned about the impact of the budget and its effect on the education sector.

The recommendation made by Government, to all intents and purposes, as to where the level of council tax should be on Anglesey for the next year, suggests that council tax should increase by around 10 per cent. That's the Government recommendation, but that's not increasing in order to invest and to increase budgets; it's an increase of 10 per cent while at the same time making big cuts to education budgets. I know that officials are working hard to mitigate the cuts that they are going to have to make in education. There has been talk of over £1.5 million, and I do hope that that figure can be lower. But schools have no scope to make further cuts. One headteacher told me, 'I'm not going to worry anymore, because if I start worrying about the financial deficit then I'll make myself ill. So, what I'm going to have to do is try and deal with the situation and accept that there is an inevitable overspend'.

We didn't get to this question from me in the last questions session to the Minister: 'Will the Minister make a statement on school budgets given the local authority settlement for 2019-20?' The written response I received was:

'Across Government, we give priority to assisting schools through the local government settlement. We continue to provide additional grant funding above core funding for schools through local authorities. In the current Assembly term, we are committed to investing £100 million to increase standards in schools'.

Now, that response has infuriated local government and those in education in my constituency. It's an unconsidered response because core funding is the problem. Without adequate core funding, an authority such as Anglesey is pushed to close schools whilst the Government brings in a new code in order to try and mislead people by suggesting that they're trying to save small schools but without providing any additional funding to implement that code. 

The situation we're in is not sustainable. I could talk about social services, too. When council officials tell me that they're concerned that they can't afford to implement court orders in order to safeguard vulnerable children who are under threat, that makes me think that there is something fundamentally wrong with the level of funding provided to our local authorities. They will have to make it work, but that's the level we're talking about. We're talking about substantial cost to protect the most vulnerable in our society, and we've reached that point where local government can no longer afford to do those things.

Yes, there's been an unfair and unjust decade of austerity from the Conservative Government in London, but there are political decisions that have been made by the Labour Government here in Wales that mean that the vulnerable are suffering, and local government is a perfect example of that.

I'm very pleased to have the opportunity to speak in this debate today. Of course, I'm extremely proud to represent my home town and Alyn and Deeside, and the constituents quite rightly deserve and expect the high-quality public services and delivery by the local council, and, in that case, that is Flintshire County Council. Now, I certainly don't envy the Government in having to draw up the budgets in the face of UK Government austerity, which continues to make it difficult for local councils to deliver the services that they are used to. I was particularly shocked when the First Minister highlighted, back when he had responsibility for finance, that there is £800 million less to spend on public services in 2019-20 than there was in 2010-11. I've had many honest conversations with local councillors from Flintshire across all parties, and Members will of course know I was vocal in my concerns last year. 

Just last Friday, I was talking to local representatives again about some of their concerns. Local residents and councillors often tell me about their feeling of the north-south divide, so, again, I am pleased that the new First Minister has made a recent announcement of the appointment of a Minister with responsibility for north Wales, and I think that is a positive step forward for residents across all of north Wales. 

Llywydd, if the Brexit negotiations have taught us anything, politics is about listening and working together. So, yes, I am pleased that there is an uplift in the original settlement provided to Flintshire, and I also welcome how we've been able to reduce the reduction in the revenue support grant from -1 per cent to -0.3 per cent, and specific funding announcements for social care have also been welcomed locally.

I welcome, of course, the other measures as part of a package of an extra £141.5 million in revenue and capital for local government over the next three years, but I would like to just make a couple of points that I've made before about council tax and how we can make things easier for the people who I speak to who struggle to make their payments on a monthly basis. The Wales Centre for Public Policy report interestingly highlighted the opportunities to make council tax more progressive, and I would like to see the government in the near future looking at how we can possibly reform council tax. 

I also believe there needs to be a serious conversation in the future about two points in particular: firstly, the way in which local councils are funded, as well as the shift from central funding to local taxation; and finally, the future of consequential funding and the importance of ending austerity for good. I, too, received a letter from the leader of Flintshire County Council last night, and I would welcome a meeting with the Minister for finance and the Minister for local government at the earliest opportunity to discuss the issues raised in that letter and also around the consequential funding, as I had planned prior to the latest reshuffle.

I want to close my contribution today, Llywydd, by paying tribute to all the councillors and the council staff who work hard, day in, day out, to provide everyday services to the people of Wales. They often get the brunt of criticism, but we should never forget that they are the front line of delivery. And I also want to reaffirm in this Chamber today my commitment to my local council that I will always stand up for my local area and the councillors and the council staff that provide those services that people really rely on. Diolch yn fawr iawn.

We are fast approaching a crisis in public services. Local authority budgets have been cut to the bone in recent years, and this year’s local government finance settlement will do nothing to relieve the pressure on local public services. Wales’s local authorities, on the back of this year’s settlement, are planning massive cuts to local public services and the laying off of teachers, social workers, highway engineers, refuse collectors and a whole raft of council employees. In my region, Swansea council are planning to cut 145 teaching posts and 127 social services posts. Neath Port Talbot council propose to close libraries and end free transport for post-16 students with special educational needs, as well as adults attending respite care, in addition to laying off council staff and abandoning plans for new schools. Bridgend have already closed public toilets and are proposing to cut bus route subsidies, close day centres, care centres and services for the elderly, as well as laying off council staff.

This is being repeated in town and city halls across Wales—services cut to the bone, teachers sacked, day care axed. And yet, people are being asked to pay more—pay more for less, much less. Council tax bills due to drop on doormats across the country in the coming weeks will see rises of around 5 per cent or more—much lower than people’s wages—yet the public will have no choice but to give away more of their hard-earned cash for ever-dwindling services.

So how did we get here? Local government officials blame the Welsh Government, and the Welsh Government blames the UK Government, but in truth they are all to blame. Years of waste and buck-passing have resulted in today’s crisis. Decades of profligate, wasteful spending and an unfair tax system at a UK level have resulted in the need for austerity. Welsh Government’s mismanagement of local government has resulted in duplication and waste; why do we need 22 separate local authorities? We don't. But the Welsh Government, while acknowledging this fact, have failed to do anything about it. As a result, limited resources are spread much more thinly than they need to be, and the way these resources are allocated has been mismanaged by successive Welsh Governments, and this local government finance report is based on a flawed formula, which results in great disparity in funding. Why is spending per head so different across Wales? People in Swansea each get £247 less spent on their services than those in Denbighshire. Why does Bridgend receive over £130 per head less than their neighbouring authorities? And why does Wales’s second city receive nearly £160 per head less than Wales’s third city?

And when it comes to how the moneys are spent, there is massive disparity amongst Wales's councils. Some people get their bins collected every week or two; others can expect a monthly collection. Average council tax bills in Caerphilly are over £700 lower than in Monmouthshire. And why have local authorities been allowed to rack up such high levels of reserves? Some councils are sitting on over £100 million in reserves, while planning to cut services, to sack teachers and highway officers and social workers.

Enough is enough. We need root-and-branch reform of local government and its finances. People's lives are being decimated so that we can play party politics, so that people can remain in office. Well, no more now. It's time to get our house in order, and it's time that Welsh Government lives up to its responsibilities.

I call on the Minister for Housing and Local Government to reply to the debate. Julie James.

Diolch, Llywydd. I'd like to start by thanking Members for their contributions and for contributing to the debate. I first want to respond to the comments on the sufficiency of the settlement. This Government has recognised the priorities and pressures we and local government are facing through this settlement and the wider funding available to local government. Indeed, I went out of my way to say that, whilst this settlement is not calamitous, it's hardly good news for local government in the light of austerity policies driven by the UK Government. The party opposite and many other opposition Members—you'd think that austerity was a home-grown policy made here in Wales and not something that the Conservative Government has been pursuing for longer than any other Government in history. The settlement we have today is very much as a result of those austerity-driven policies.

However, as a result of the comments made by a number of Members around the Chamber—some more helpful than others—I would like to just reiterate that I am extremely happy to meet with any Member or groups of Members who wish to discuss the settlement in general or the specifics of the settlement for their local authority. I'm more than happy to meet with Members to explain why the formula is as it is, which is very easy. It's because the partnership council's finance group and sub-group come up with this formula in partnership with local government. It is constantly reviewed, it is agreed by the partnership council in partnership with local government. It's not something we are imposing on local government, and if any Members think that they have a better way of distributing the money that they think would work across Wales, then I'm more than happy to discuss it with them. This formula is very much an agreed formula with local government, and it takes into account population numbers, density, sparsity, deprivation and a number of other things, which result of course in differential expenditure across Wales, depending on the social and economic circumstances that each local authority finds within its borders.

And in response to other Members asking about different decisions, of course local government is the first—first, or second if you have a community council—tier of democracy, and, of course, the democratically elected members of those local authorities make those decisions on behalf of the people that they represent, and that is as it should be. And as I said in my opening remarks, we want a lively, diverse and able local authority constituency in Wales, and I applaud their efforts to do so.

I just want to start by reminding Members quickly where we were at the beginning of this budget round. In January 2018, we published the local government settlement for 2018-19 and an indicative figure for 2019-20. Local government was clear last year that it needed as much certainty for future years as possible. The Assembly voted then to give local government the certainty that core unhypothecated funding for 2019-20 would be at least £4.2 billion. That's not a position, which is a 1 per cent cut, that we have wanted to leave local government in, but reflected the degree of certainty we felt able to give against the backdrop of our own budget position and the uncertainty of public finances. As a result of the final budget confirmed earlier today, core unhypothecated funding for local government in Wales is an increase, in fact, of 0.2 per cent over last year.

So, the issue for Members here is that you can't have both certainty and timeliness. So, either we have to give certainty earlier in the year as a base and then allow us to move as the budget moves, or we wait very late in the year to have complete certainty, and then you don't have the time to plan. You can't have both of those things, given where the UK Government is in terms of when it announces its budget. So, I think if local authorities would prefer to have this absolute certainty later on without the time to plan, then that's something we can discuss, but, currently, they're asking for the longer time to plan with the knowledge that that means we have continuing challenges and difficult choices to make during the course of the budget. It's something that I'm sure the finance Minister and I will be more than happy to discuss with them as we go forward. 

The settlement does mean that local authorities will have to look at how to transform services in order to respond to changing needs and expectations or, where necessary, choose how to reduce them while carrying the public with them, as well as deciding the level at which they will set council tax to reflect those choices. And those are rightly matters for local government. I believe those are challenges that local government in Wales can meet. While I would not seek to persuade them or you that this is a good settlement, neither is it a catastrophic one, and they ought to be able to work well within this settlement. 

The Government's priority is and always has been to protect councils from the worst cuts passed on to us by the UK Government, and this is reflected in the settlement for 2019-20 I've presented to you today. We have, despite opposite benches groaning every time I say this, ensured that local government hasn't seen the attack on services that the English local government sector has. We have seen protections of budgets in a way we have not seen across the border. We've sought to work alongside local government at all times to ensure we are able, where possible, to protect services and protect the most vulnerable. We will continue to maintain full entitlements under our council tax reduction scheme for 2019-20, and are again providing £244 million in the local government settlement in recognition of this. 

We remain absolutely committed to protecting vulnerable and low income households, despite the shortfall in the funding transferred by the UK Government following its abolition of council tax benefit. The arrangements for 2020-21 onwards will be determined as part of our wider considerations about how to make council tax fairer, as I think Jack Sargeant and a number of other people mentioned. This will include funding for new responsibilities and, taking today's settlement and confirmed grant funding together, local government in Wales will receive nearly £5 billion in revenue for 2019-20, a cash increase of around £70 million on 2018-19. This additional funding reflects our priorities of social services and education, in particular. 

Aside from the funding announced through and alongside the settlement, we have made other commitments to support authorities in the coming financial year. We will continue discussions with local government to take forward a new housing investment fund between large-scale sites of development. This will be met with a combination of capital and financial transactions capital of up to £15 million. We will increase the Welsh Government's intervention rate for capital schemes under band B of the twenty-first century schools and education programme.

We have written jointly with the Welsh Local Government Association to the Chancellor to repeat our calls for the UK Government to fund the increased costs to employers associated with changes to pensions, in answer to Mike Hedges's question. We have not yet received a response, but we continue to press for an answer, as we absolutely understand the difficulty that the uncertainty about pension costs gives to local authorities and other bodies when trying to set their budgets appropriately.

With the uncertain times that we are in and that lie ahead, it is more important than ever that we work together in partnership. Despite the Prime Minister's pledge, however, there is no sign of an end to austerity. I am committed to working with local government to provide flexibility where possible. We are committed to considering how local government might be more empowered and better strengthened. I will continue to work with authorities to support them to ensure that each authority makes the most effective and efficient use of all of the resources available to it.

This means there must be a commitment from local authorities to regional working. There must be greater collaboration with health boards and the education consortia to secure improved outcomes and increased resilience. There must also be a recommitment to the spirit and letter of the terms of reference of the working group on local government. I do believe the settlement reflects a reasonable outcome for local government within the current financial climate. It has been achieved in yet another challenging year, and recognises our commitment to invest in essential public services such as education and social care.  

In closing, I will just once more reiterate the positive work on the distribution formula with local government. The annual changes to the formula are agreed each year, as I said earlier, between Welsh Government and local government through the finance sub-group. This means we are confident that we deliver an equitable and objective distribution of the funding available. I certainly deplore any suggestion that there is deliberate bias or unfairness in the formula, and to suggest that that is so is very unfair to those who engage so positively in the work to deliver it.

I'd like to add, too, that we've continued to publish the settlement for local government in Wales earlier than other parts of the UK. As I said, that is an agreement with local government to give them the maximum possible time limit to plan. The provisional local government settlement in Wales, published over two months earlier than in England, allowed for that final planning. In England, the provisional settlement was published only six days before our final settlement. On that basis, Llywydd, I commend this settlement to the Assembly. Diolch. 

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

Voting deferred until voting time.