The following amendments have been selected: amendment 1 in the name of Rebecca Evans, and amendments 2, 3, 4, 5 and 6 in the name of Rhun ap Iorwerth. If amendment 1 is agreed, amendments 2 and 3 will be deselected.

Item 8 is the Welsh Conservatives' debate on local government funding, and I call on Mark Isherwood to move the motion.

Motion NDM7018 Darren Millar

To propose that the National Assembly for Wales:

1. Recognises the important role played by local authorities in delivering public services across Wales.

2. Acknowledges the funding challenges currently faced by Welsh local authorities.

3. Notes that Welsh council taxpayers currently pay a higher proportion of their income on council tax than in England or Scotland.

4. Regrets that

a) the level of council tax in Wales has trebled since the formation of the National Assembly for Wales in 1999; and

b) the level of council tax in Wales has risen at a faster rate than in England and Scotland.

5. Calls on the Welsh Government to commission an independent review of the Welsh local government funding formula.

Motion moved.

Diolch. Our motion today recognises the important role played by local authorities in delivering public services across Wales. It also acknowledges the funding challenges currently faced by Welsh local authorities.

From their obsolete local government funding formula to their botched local government reforms, successive Welsh Labour Governments have left councils having to balance the books under sustained pressure. Nine out of 22 Welsh local authorities receive an increase under the Welsh Government’s settlement for 2019-20. However, with the exception of Denbighshire, which now receives a flat settlement, all north Wales councils are to receive a cut, with the largest cuts in Flintshire, Conwy and Anglesey, alongside Monmouthshire and Powys.

Rural councils and north Wales councils have therefore lost out, while Labour-led councils in south Wales, such as Cardiff, with total usable reserves in April 2018 of £109.6 million, and Merthyr Tydfil are this year’s biggest winners, with uplifts of 0.9 per cent and 0.8 per cent respectively. This leaves the average household in Wales with a £1,591 council tax bill, nearly £100 higher than the current financial year.

Only two out of 22 local authorities, Rhondda Cynon Taf and Neath Port Talbot, have not broken the informal 5 per cent increase cap on council tax rises set by the Welsh Government—

Will you take an intervention?

—but they're in receipt of some of the most generous financial settlements. Joyce, yes.

I thank you for taking the intervention, but I would just like to point out that you know full well that it's not the Welsh Government that sets this formula, but it's an agreed formula by the Welsh Local Government Association, and I think it's important that we set the record straight before we go any further.

I will be addressing that in the rest of my speech.

Rhondda Cynon Taf, with reserves of £152.1 million, is also receiving a 0.8 per cent rise; Newport, with reserves of £102.3 million, a 0.6 per cent rise; Swansea, with reserves of £95.1 million, a 0.5 per cent rise. However, councils with the largest cuts of -0.3 per cent include Flintshire, with reserves of £49.4 million, Conwy with just £22.7 million, and Anglesey with £24.1 million.

The Welsh Government tells us that its local government funding formula is heavily influenced by deprivation indicators. However, Anglesey and Conwy are amongst five Welsh local authorities where 30 per cent or more of employees are paid less than the voluntary living wage, and prosperity levels per head in Anglesey are the lowest in Wales at just under half of those in Cardiff, yet council tax payers in Anglesey and Conwy are facing 9.1 per cent increases, compared to just 5.8 per cent in Cardiff and 4.5 per cent in Rhondda Cynon Taf.

Our motion notes that Welsh council tax payers currently pay a higher proportion of their income on council tax than in England or Scotland. It also regrets that the level of council tax in Wales has trebled since the formation of the National Assembly for Wales in 1999, and that the level of council tax in Wales has risen at a faster rate than in England and Scotland.

In 1998, the average Welsh Band D council tax payer had to pay £495. This has risen to £1,591 in 2019. In other words, council tax in Wales has risen by an astonishing 221 per cent since the UK Labour Government took control of Wales in 1997, a far greater leap than that of England, up 153 per cent, and Scotland, up 57 per cent. And whilst both the UK Conservative Government and the Scottish Government enabled council tax to be frozen in the years up to 2017, the Welsh Labour Government spent elsewhere the £94 million in consequentials it received to help hard-pressed council tax payers.

The Welsh Government defends this by stating that average band D council tax levels in Wales are still lower than in England, whilst dodging the reality that council tax payers in Wales spend the largest proportion of their wages on council tax in Britain, that they have faced the biggest increases, and that this is a false comparison because it starts from a historic baseline when average band D council tax levels in Wales were, by definition, significantly below those in England.

Welsh Labour Government Ministers have long compared funding between England and Wales, claiming that councils there are worse off. However, as local government funding policy has diverged significantly since devolution, including direct funding for schools and business rates retention in England, it is completely impossible to make this comparison. Their default position is always to blame everything on the UK Government and to conveniently forget that the funding floor agreed by the UK Conservative Government means that the Welsh Government now benefits from the certainty that the funding it receives for devolved services won’t fall below 115 per cent of the figure per head in England. Currently, for every £1 per head spent by the UK Conservative Government in England on matters devolved to Wales, £1.20 is given to Wales. Meanwhile, the Welsh Labour Government has continually made bad deals with, for example, Kancoat and the Circuit of Wales, costing Welsh taxpayers millions. It is the Welsh Government who should be answering for their disgraceful funding decisions.

Interestingly, the Trade Unionist and Socialist Coalition—Jeremy Corbyn’s own cheerleaders-in-chief—also stated last October 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.'

I'm simply quoting; if you question that, perhaps you may wish to speak to your colleagues or comrades.

Local authorities are sitting on £800 million in useable reserves, and their elected representatives need to be held accountable in saying how that is spent. The issue is not that they have sufficient resources to cover big projects, but that some councils are increasing their levels of reserves while expecting council tax payers to cover inflation-busting council tax rises.

As I have detailed, south Wales Labour-run councils are the real winners of the final local government settlement. Anglesey county council’s finance chief warned that if the council didn't put more cash into reserves, the authority could go the same way as Northamptonshire, which was unable to balance its books and became effectively insolvent last year.

Another of the biggest losers, Labour-led Flintshire County Council, has imposed an 8.1 per cent council tax increase, taking the total increase, including police, fire and rescue authority and community council precepts, to 8.75 per cent. They launched a campaign last November, #BackTheAsk, which highlighted cross-party frustration about the funding they receive from the Welsh Labour Government. The campaign specifically asked for a fair share of funds from Welsh Government, highlighting that Flintshire is one of the lowest funded councils per head of population. This had been unanimously agreed by all parties on the council.

In December, before the final budget was passed, and after the announcement of extra funding from the Welsh Government, Flintshire estimated that it still faced a £3.2 million funding gap, stating that it is unreasonable for councils to be put in this position, and a cross-party group of Flintshire councillors subsequently travelled here to lobby for fairer funding last month. Even in Flintshire, however, opposition members had moved an alternative budget using additional contingency reserves to keep council tax increases to 5.5 per cent, arguing that the Labour leadership had taken the political decision to make a point about local authority underfunding.

Given everything I've detailed, our motion calls on the Welsh Government to commission an independent review of the Welsh local government funding formula. In a letter to the First Minister, Powys County Council joined calls for a fairer funding formula, stating that

'It is time that the funding formula underwent a comprehensive review and that rural authorities like Powys had a fair deal. We are not asking for special treatment but for fair play...The financial and social environment facing local government has changed beyond all recognition since the funding formula was introduced. It is time that formula was changed to reflect the world we live in today.'

The Welsh Government's amendment to this motion asked us to recognise that the funding formula for Welsh local authorities is reviewed annually through a partnership between Welsh local government and Welsh Government. However, as the Welsh Local Government Association has previously stated, their finance distribution sub-group has limited influence on the formula, stating in 2016 that, 'the distribution sub-group produces a report. It's usually a report of what the group has covered on its work programme. It's usually a small part of the formula. The distribution sub-group only deals with a few tweaks and changes annually. We, the WLGA, ended up agreeing to that as an association. That's not an agreement that the whole formula is right; it's just an agreement that we've delivered on the sub-group's work programme.'

Although the independent commission on local government finance Wales report in 2016 recommended that the existing revenue support grant formula be frozen and an independent grants commission be established to oversee the development and future operation of a new grant distribution formula, this has not happened. The Welsh Government's review of local government finance only mentions development of the settlement formula, rather than a full-scale review, stating that the formula has become more complex since its inception, and there is merit in exploring the scope for simplification and changes to aid transparency and operation. As I've evidenced, however, the need for urgent action goes much further than these carefully crafted, empty words, and instead of hiding behind local government, a responsible Welsh Government would be taking the lead.

I have selected the six amendments to the motion. If amendment 1 is agreed, amendments 2 and 3 will be deselected. And I call on the Minister for Housing and Local Government to move amendment 1 formally, tabled in the name of Rebecca Evans. 

Amendment 1—Rebecca Evans

Delete all after point 2 and insert:

Notes that council tax levels for band D properties in Wales are on average lower than those in England.

Recognises that the funding formula for Welsh local authorities is reviewed annually through a partnership between Welsh local government and Welsh Government.

Amendment 1 moved.

Formally. 

Thank you. Can I call on Dai Lloyd to move amendments 2, 3, 4, 5 and 6 tabled in the name of Rhun ap Iorwerth? Dai. 

Amendment 2—Rhun ap Iorwerth

Delete point 4.

Amendment 3—Rhun ap Iorwerth

Delete point 5 and replace with:

Calls on the Welsh Government to consult on a long-term funding settlement for local government which would allow for longer term planning for local government.

Amendment 4—Rhun ap Iorwerth

Add as new point at end of motion:

Recognises that council taxes have risen due to austerity implemented by Westminster and lack of priority for local government by the Welsh Government when formulating the budget.

Amendment 5—Rhun ap Iorwerth

Add as new point at end of motion:

Recognises the important link between NHS and local government in the delivery of services.

Amendment 6—Rhun ap Iorwerth

Add as new point at end of motion:

Calls on the Welsh Government to reduce the number of hypothecated grants in order to allow for greater flexibility on spending of grants by local government.

Amendments 2, 3, 4, 5 and 6 moved.

Thank you very much, Deputy Presiding Officer, and I’m very pleased to take part in this debate on local government. As you’ve already mentioned, I do move the amendments in the name of Rhun ap Iorwerth.

As a former county councillor in Swansea for several years, as were others in this Chamber, I understand very well the financial challenges facing our counties. Having said that, I’m surprised that the Conservatives want to discuss these financial challenges, because it’s their austerity policies coming down the M4 from London that have caused the financial cuts. Our counties are in need of genuine partnership and support to achieve the Government’s aims, and it’s also true to say that this Labour Welsh Government in the Senedd hasn’t always prioritised the funding of local government either. And with the relationship between the Government here and the leaders of our councils at times potentially challenging, who can forget the accusation of Oliver Twist from Alun Davies, the Minister at the time, and that led to a number of similar comparisons from the Dickensian world.

Now, 22 authorities came into existence in 1996 under the Conservative plan, and, of course, the Assembly came into existence in 1999, and we’ve never had the sensible and mature discussion of the expectations of those two different layers of government in this place. How can we collaborate? The Assembly was the new baby, and the councils were also relatively new. We never had that mature discussion to decide who should do what and how we could collaborate better to improve the lives of the people of Wales. So, we have a Senedd. What activities should be done on a national basis? What activities should be left to the regions? And what activities should be undertaken locally? As well as how we should pay for this locally. Council tax and business rates are not fair by any stretch of the imagination, and they can stymie innovation. But, as I've said several times in the Senedd over the years, Wales hasn't been funded sufficiently under Barnett, as it was for years, or under the funding floor as it is now. Wales isn't funded sufficiently, and that was true even before the cruel and destructive policy of austerity from the Conservatives came into existence. Please support our amendments. Thank you.

Are rural local authorities consistently dealt a raw deal when it comes to the block grant from the Welsh Government? The answer to that is 'yes'. I listened to Dai Lloyd's contribution. The UK Government has provided an extra £550 million in this next financial year, but that extra funding has not been passed on, certainly not to rural councils across mid and north Wales.

My own local authority area of Powys has had the poorest or joint poorest budget settlement in nine out of the last 10 years. That's £100 million being taken out of their budget, and that is, of course, an unsustainable situation that has inevitably affected the delivery of essential local services. As Mark Isherwood, my colleague, has already pointed out, we see Cardiff council get an increase but rural authorities across mid and north Wales having decreases. Yes, Mike Hedges.

Would you accept that Powys has far more per head than Cardiff does?

Well, Mike, I'll come onto that in my contribution. Mike, you intervene on me every year on this annual debate, saying—

The same thing.

—saying the same thing, which I'll come onto. And Rhondda Cynon Taf, of course, as well, stockpiling £152 million of usable reserves. Others, like Powys County Council, my own local authority area, are having to balance their books after years of cuts to their budget. So, does the funding formula need to change? Yes, it absolutely does. And the most significant change in that funding formula in my view is that the change needs to take into account a significant population change in the age of its older population.

The Office for National Statistics' prediction for Powys is that there'll be a 7 per cent fall between 2014 and 2039. This, by the way, is the largest predicted fall amongst all 22 local authority areas. But, during the same period, Powys's older population, those over 75, is going to increase from 11 per cent as it is now to 23 per cent in 2039. So, by 2039, the ONS is predicting that a quarter of the population of Powys will be over 75 years of age, and that is a rate that is significantly greater than the national average is predicted to be in 2039. Why is that? It's attributed mainly to people wanting to retire to Powys. Why? Because it's a beautiful part of the country—it's the most beautiful county in the UK. People want to retire to the area. But in some years after their retirement to the area, there's a consequence, of course, of that ageing population. I don't think I need to go into too much detail on that: the reasons are obvious. [Interruption.] Well, if Joyce Watson wants me to go into that, there is a cost to social services. We all know that the biggest cost to a local authority is its social services budget, and if they've got an older population there's going to be a significant increase to the social services budget that's required. The funding formula does not take that into account and that's exactly why we're asking for an independent review of the funding formula to take place.

Age Cymru provided a very good briefing to me earlier this week, highlighting the importance of community facilities and free public transport in providing the opportunities for social interaction to tackle loneliness and promote health and well-being for older people to remain active and retain their independence. And, of course, this is all the more important in rural areas. If you're running services in very rural areas, it's always going to cost significantly more for that to take place, and that cost—. I give the example of when Joyce Watson was talking about Welshpool library the other week. That library's being downgraded because of the poor financial settlement that Powys County Council receives from the block grant from Welsh Government, and that's a consequence of the unfair formula. 

No, it's not. It's a consequence of your actions on the council. 

What I wanted to say: just a couple of weeks ago, the leader of Powys County Council wrote an open letter to the First Minister to change the way that county councils are funded and to give rural authorities a much fairer deal. Unfortunately, I've not got time to read an extract from that, which I would have liked to have done.

What a shame.

It is a shame. Joyce Watson represents Mid and West Wales. You should be fighting for Powys, not giving in, and I'm shocked Joyce Watson isn't standing up for the people of Powys, who she is supposed to represent.

You've named me three times now, so you can take an intervention. 

I fully appreciate your frustration—

You've named me three times now. You can take an intervention. 

I'm not giving an intervention, Joyce.

You've named me three times, you should take an intervention. Three times you've named me.

Well, I don't think he is. 

Am I permitted to give an intervention?

You can, briefly.

I just think that you need to accept that we can only spend the money we've got, and I want to know how many times you've sent letters to the Conservative-run Government that's deprived this Government of the money to give to local authorities. That's the answer I would like from you.

Right. Russell George. 

Thank you, Deputy Presiding Officer, for allowing that. Joyce Watson is completely missing the point here. The UK Government is giving extra funding to the Welsh Government; the Welsh Government is reducing its funding for Powys County Council, and Joyce Watson wants to defend that. Well, that is absolutely shocking for someone who should be defending her own constituency area. 

Lynne Neagle. 

Thank you, Deputy Presiding Officer. I would like to be able to welcome today's debate from the Welsh Conservatives because I do think that local government is facing its toughest period since devolution in 1999, but it would be to ignore the elephant in the room to thank the Tories for the opportunity to talk about this because it is their austerity agenda, that political choice to starve services of funding, that has led to the situation we find ourselves in today. Nowhere is that duplicity more obvious than in the final point of the Tory motion, calling for a review of the local government funding formula, as though a review of the formula might suddenly increase the quantum available to councils in Wales. It will not. As though the formula isn't under constant review between Welsh Government and the Welsh Local Government Association. It is. As though any independent review would ever recommend moving money away from poorer communities to more affluent, Tory-run councils. How could it possibly?

Even a cursory glance at the reforms that have been introduced by the UK Government over the last eight years will show that the poorest areas of Wales have been hit hardest by those changes. Relative child poverty in Wales is estimated to increase substantially with reforms pushing an extra 50,000 children into poverty by the time they're fully implemented: your party. The latest analysis shows the changes since 2010 have a disproportionately negative impact on the incomes of several protected groups, including disabled people, certain ethnic groups, women, and particularly negative impacts on intersectional groups who experience multiple disadvantage. It simply follows that any local government funding review would have to take that into account.

In contrast, the issues that the Tories often cite about challenges to the councils they run and seek to run, rurality and travel time, for example, have not changed and will not change—[Interruption.]

Will you give way?

—and are, anyway, already factored into the formula as it exists today. I give way.

Thanks for giving way. I don't disagree with you, and we wouldn't disagree with you, that any review of the funding formula would have to take all those factors into account, and maybe in some areas it would be decided that amounts of money going to seats like yours, it's right that that should happen, but at the same time we believe that issues such as sparsity in rural areas like Russ George and I represent should also be taken into account, and that isn't happening at the moment.

Nick, I'm very familiar with the local government formula, actually, and sparsity is already taken into account, so that is a non-starter. I don't think any Labour AMs or Welsh Labour Government would have anything to fear from a review of how funding is allocated, but it is simply not where the problem currently resides. The problem resides in 11 Downing Street; that is where Wales's £1 billion shortfall was decided, and it is where funding for England's councils has been flayed to the bone. Next year, 168 councils in England will receive no central Government funding at all, and by 2025, the Local Government Association estimates that an £8 billion funding gap will exist for councils in England. What does that mean? It means job losses, wholesale privatisation, library closures and, even now, the prospect of shorter school days. If that is the Tory vision for local government in Wales, then at least be honest about it.

In Wales, the Welsh Government and councils are working hard and working together to keep services sustainable. I welcomed the move to allocate additional resources to councils in the final budget, fulfilling the promise that they would be first in the queue for any extra money. But that has merely moved the financial choices from the impossible to the unpalatable. The pressures remain, and that is why we need a really honest debate about local government and finance, not one based on the false prospectus before us today. There needs to be more recognition of the difficult, brave and often innovative choices that are being made at local level to minimise the inevitable cuts and tax increases. The idea that local councillors relish the opportunity to increase council tax to keep our schools open for a full day is simply beyond the pale.

Politics is a dog-eat-dog world, but we should never criticise a council of any colour that decides to prioritise education and social services, because there is a consensus in this Assembly, and in the country, that they should be priorities for councils across Wales. I am proud that this is happening in Torfaen under a Labour council, and that education is being recognised as their most important preventative service. I pay tribute to Councillor Anthony Hunt, Labour leader of Torfaen council, to all the Labour councillors in Torfaen, and, indeed, to all the councils across Wales who work so hard to protect public services against the onslaught of Tory cuts. Education and social care are national priorities and they are local priorities. We should have the courage to support those making the difficult choices, not further demean our political system by pretending that you can cut budgets, cut taxes and keep services. It is a cheap political lie to say that you can do that.

We need to change the terms of the debate about local government if we really want to improve the services closest to those we represent. We need a positive discussion about enabling innovation, financial planning and support for leadership at all levels of local government, but above all, we need an end to Tory austerity, and today's motion does nothing to further that agenda.

Look, I wonder if we can just start with the obvious here, which is that no Government likes cutting local authority funding and no council likes putting up council tax. I think what is less obvious, despite some of the assertions made in this Chamber, is why this is happening and why the difficult task of local government funding reform, when that might begin, because it's just too easy to try and shut down the debate, as we heard in earlier questions and some of the representations today, by pointing the finger at the UK Government. If that's all you're going to say in replying to this debate, Minister, we may as well all go home now, because constituents are also looking as to where the decisions about how spending on services nationally and within their communities are prioritised. And that's the work that is done in this Chamber and in chambers in our council areas.

Whatever budget decisions are made in London, the funding floor ensures that this Government has more to spend on those services per head than they do in England, and that is a figure that was agreed with the current Labour First Minister. Your predecessor, Minister, said that blaming the Tories is not a strategy for the future and blaming austerity and carrying on business as usual is short sighted. The former Labour leader of one of the councils in my region says pretty much the same: 'The easy and lazy option when it comes to local government is to blame austerity and the Tories. It too often ignores other factors such as poor decision making when it comes to both budgets and service delivery. The writing was on the wall for most authorities even before 2008, which of course was the date of the crash and when we still had a Labour Government at Westminster.'

I think they have a point. It goes back to what Lynne Neagle was saying about looking at this afresh. But I don't think that point is universally accurate. Some of our local authorities have had no room for manoeuvre for many years—no space to make poor decisions—but not all of them. The fact that they've been broadly the same councils that do relatively well and relatively poorly over this period of years I think is now strikingly apparent. And if the reason that those councils that do relatively well—and I'm saying 'relatively'—is primarily due to waiting for deprivation, then I think it's fair to ask why those council areas are still so deprived and still have quite high levels of useable reserves. Other councils have had to deal with their challenges with considerably less per capita funding and reserves.

Now, yes, of course I realise that the needs of every council area are different, but this disparity between them is now clearly unfair, and I think it's been brought about by the application of a formula built on out-of-date irrelevant data over a number of years. If this formula were fair and the difficulty is due wholly to the UK Government shrinking the size of the overall pot, you would expect council taxes across Wales to rise at broadly the same rate. That's clearly not the case and the differences are too stark to be explained away by local conditions or just poor budgeting. Powys, as we've heard, is having to raise its council tax by twice as much as Neath Port Talbot, and that is not marginal. Neath Port Talbot has had the fourth highest rise and Powys the hardest cut, so it would be easy to draw, this year, something of an obvious conclusion. But Pembrokeshire, which is charging 10 per cent—almost as much as last year—actually had a rise, albeit the most modest, but I'm using these two examples to speak to the financial starvation of particular councils over many years, not just recently, going back as far as 2008—

Will you take an intervention, Suzy?

Yes.

Thank you. I'm glad that you've taken an intervention and I'm glad that you've used the case of Pembrokeshire, because what Pembrokeshire have done over the years—and I used to be a Pembrokeshire county councillor—is use the claim of the lowest council tax in Wales, no rise just before elections, as an excuse and a reason to get re-elected. But what you need to look at underneath those headlines is: are they the highest charging authority for the services they provide by not actually increasing their council tax and putting the burden on everybody but on the people who need the services? That's what you need to do.

Well, I think you might've just made one of the points for me, Joyce, which is actually the point that was raised by the former Labour leader of a different council earlier about some councils making poor decisions about how they budget, and now they're taking the opportunity to punish their own residents by doing this. But my overall point was to say that things have been changing over a period of years and certain councils over that period of years have done relatively better than other councils.

Now, Minister, I do think you have some questions to ask those councils with the highest useable reserves—genuinely, now—as well as a history of poor decision making and wasteful behaviour. Maybe Pembrokeshire is exactly one of those. But now, it's all councils that are speaking of financial starvation, and of course councillors in my own region are voting against rises of 6 per cent and 6.6 per cent, because those Labour councils have not had to do this before. They've suffered least from cuts over the years, but even they have now reached a tipping point, and not least by the whole slate of underfunded legislative responsibilities that have been placed on them by this Government.

Now, unlike Torfaen, the Labour leader in Bridgend says he cannot protect social services and schools, and I could easily point to cases where they've wasted money in lost legal cases, poor land deals, contracts going wrong, but even so, they still need to fund, this year, schools and social services. And their planned savings needed to do that are high and medium risk, which, as we all know, is audit speak for undeliverable. Minister, it'll be your greatest achievement if you and the Welsh Local Government Association—and we heard they're not happy with this formula—can get this out of the box marked 'too difficult' and face up to the inevitable outrage you're going to get from the losers. There are losers now, and the process by which they lose can no longer claim to be fair.

I welcome this opportunity to discuss local government. In fact, I welcome any opportunity to discuss local government and I wish we had more of these debates on local government. I might not agree with what's been said by Mark Isherwood, Suzy Davies and Russell George, but I think it's important we get this debate and discussion taking place in front of everybody.

Can I say, first of all, that this is taking place against a background of Tory austerity—a political policy, not an economic one? But what actually happens here? The percentage of the Welsh budget spent on health has increased year on year. As local government was the other large budget funded by the Welsh Government, it has gone down. But when you consider some of the services covered by local government—education, social services, highways, refuse collection, trading standards, food hygiene, pollution, sports facilities, homelessness and planning—it is easy to see how important local government and local services are. I stopped at 10, I could've kept on going, but I don't think anybody would have liked to have listened for five minutes to a list of what local government does.

As the funding that local government gets from the Welsh Government, under the catchy title of 'aggregate external funding', goes down, two things happen: council services reduce, with council tax and charges increasing. There is a widely held belief by many council tax payers that their council tax pays for the services provided by the council. What has happened in recent years is that council tax has increased while services have reduced, and council tax payers have had a variety of reactions, varying between angry and confused. This is because council tax pays for less than a quarter of the total council services, with the rest being funded by the rate support grant and the councils' share of the universal business rates. I'm sure the Conservatives would like to apologise for the decision taken by the Conservative Government in the past, where they centralised and nationalised the business rate, because local authorities should be able to set their own local business rates. Now, it's all set centrally, and that has an effect.

On business rates—

Can I make an intervention?

Please.

Would you also accept that people don't understand either that because council tax is a smaller proportion of the amount that is spent locally—say it's, I don't know, 15 or 20 per cent, whatever it might be—a 1 per cent reduction in the RSG going to a local authority will actually result in a disproportionate increase in that council tax of 5 to 10 per cent?

I'd make it more 4 to 5 per cent, but, yes, I agree with your general premise. 

Some council areas are net contributors to the national business rates, most notably Cardiff, which pays in roughly twice as much as it gets back. Just looking at Swansea in terms of income, the rate support grant reached a stage where it's paying less than 60 per cent, on its way down to 50 per cent, of the money that the council spends. National non-domestic rates: about 20 per cent. And council tax: about 25 per cent. But 65 per cent of the money goes on education and social services, and can I point out—I can't remember to which speaker earlier—about social services being the biggest charge on local government? Certainly, in Swansea's case, education is substantially the biggest expenditure.

Thank you, Mike. I always listen very carefully to your contributions on local government. With regard to social services, it is that biggest fund, as part of the budget, but I made the point in my contribution: if you've got an increasingly elderly population, such as Powys—it'll have 25 per cent of its population over 75 by 2040—surely you know the significant extra costs of delivering local services with an older population. The funding formula doesn't address that. Do you think it should address that?

Not only do I think it should, I thought it did. I think that part of the formula was percentage of population above a certain age, percentage of population at school age, so I think it does. I think that, really, councils protect social services and education, and one of the saddest things about local government is that most local authorities are getting very much the same. Swansea used to be really good at providing leisure services and cultural services. Rhondda Cynon Taf used to be very, very good at preschool services. But everybody's getting the same because everybody's under the same pressure and it's becoming much of a muchness in terms of services being provided.

The rate support grant used to be what was called a support for those that have a low council tax and, previously, low national non-domestic rates. The lower the local tax income, then the higher the national support, so that local authorities reached what their standard spending assessment said they ought to spend. It is not serendipity that Monmouth, which has the highest number of band D and higher properties, has the lowest Welsh Government support, whilst Blaenau Gwent, with the lowest number of band D and higher properties, has the highest. For the record, Monmouth council is Conservative-controlled, and Blaenau Gwent is independent-controlled, and just to correct something earlier, Merthyr is also independent-controlled.

What I would like to see happen is the following: I think we need an examination into local government funding. Health has the Nuffield study. If anybody had what they really needed—that Nuffield study was brilliant, because they said how much money they needed, year on year. Local government needs the equivalent of a Nuffield study to say how much it needs.

On the formula, minor changes—as Nick Ramsay just said—can have a huge effect. When I was a member of the distribution sub-group, we moved the highways from 52 per cent population and 48 per cent road to 50 per cent each. A minor change. This moved hundreds of thousands of pounds from Cardiff, Swansea and Newport to Powys, Pembrokeshire and Gwynedd.

Two immediate decisions that could help local Government would be: let local authorities set all charges—some are currently set by the Welsh Government—and give the funding for regional consortia to schools and let them decide whether they wish to pay into those regional consortia or not. From my understanding of the schools in Swansea, they would not be paying in.

Local government in Wales is facing a funding crisis. The final settlement for the coming financial year delivers a real-term cut in local government funding compared to last year. The Welsh Local Government Association estimated that local authorities needed an increase of some £260 million just to stand still in providing local services. However, the Welsh Government chose to turn a deaf ear to the WLGA's pleas. Make no mistake: it is a conscious policy decision by this Welsh Government to cut local government funding to the bone. When faced with the inevitable consequences of their decisions, Ministers fall back on tired old excuses of blaming Westminster for their ills and their deeds. As a matter of fact, I've been sick of listening in this Chamber on this side for the last year plus that every time—[Interruption.] Wait a minute, Joyce. What is is—[Interruption.] Why are you blaming London when you've got the money?

They conveniently forget that the funding floor agreement means that Wales benefits from the certainty that the funding that is received for devolved services will not fall below 115 per cent per head of the figure in England. At present, for every £1 per head spent in England on issues devolved to Wales, £1.20 is given to the Welsh Government. Wales is benefiting from £0.5 billion over the next two years due to measures announced by the Chancellor in the 2018 budget. So, the argument that Wales has been starved of funding does not match reality.

As a result, council tax payers in Wales are bearing the brunt of Welsh Government decisions to starve councils of the resources that they need. This is nothing new. Since 1997, council tax has trebled under Welsh Labour. Band D council tax in England has risen by 153 per cent in the last 20 years. In Scotland, the rise is 57 per cent. But in Wales, band D council tax payers now pay a swingeing 221 per cent more. Under the 2019 and 2020 funding settlement, no local authority in Wales will see their core funding rise enough to cover inflation. The leader of Torfaen council said, and this is a quote:

'councils have been left with a large shortfall for next financial year, as funding is not rising in line with the pressures faced by services like social care.'

Quote closed. [Interruption.] No. So, hard-pressed families, often in the poorest areas, have to dig even deeper to meet the inflation-busting demands.

I thank you so much for giving way, and I know you were in full steam there. Does he see any read across at all to the complaint that we make about the stranglehold that UK Government funding has on Wales with what's happening in England? English councils are screaming about the austerity measures on them, where £16 billion of core funding has been pulled away from local government in England by the UK Government since 2010. Can you see any common strand going on here?

I have already given the figures to you, and you have the power. You have complete control of local government. Austerity measures, as I have been saying earlier—. Actually, this cut was while you left no money in the Treasury when you took over the Government. Basically—[Interruption.] Wait a minute. The Government only cut a penny in the pound, one penny in the pound, to give you—. And you are saying 'austerity' because you're wasting money. Your Government—. Local government—who controls local government? The Labour Party. You imagine: Monmouth and Blaenau Gwent. Think about those authorities. Blaenau Gwent's services to the people and Monmouth. Monmouth's reserves are still below what Monmouth got—their reserves in the banks. Why are they sitting on heaps of money? Why don't they give the public services there?

Caerphilly council is increasing by 7 per cent; Merthyr Tydfil, Monmouthshire, Newport, Torfaen by nearly 6 per cent; and Blaenau Gwent by just under 5 per cent. I just told you: think about the reserves and the service they are giving. That is one of the poorest councils in the whole of the United Kingdom. Excessive council tax rises have had a devastating impact on Welsh households. The citizens advice bureaux have labelled council tax as our biggest debt problem in Wales. Local authorities have tried to ensure as much money as possible is directed to front-line services by cutting out waste and unnecessary bureaucracy, but, with statutory services such as schools and social care taking the major part of spending, local authorities have had to look at other services to bear the brunt of cuts. Deputy Presiding Officer, libraries, school crossing patrols, free car parking and leisure centres are among the services that have faced cuts in Wales, drawing widespread public opposition.

Deputy Presiding Officer, Labour has failed local government in Wales for the last 20 years. I call on the National Assembly to support our motion and deliver a better, fairer local government settlement in Wales. Thank you.

Can I call on the Minister for Housing and Local Government, Julie James?

Thank you, Deputy Presiding Officer. In opening this debate, Mark Isherwood, as usual, took absolutely no responsibility whatsoever for the political choice of austerity perpetrated on Wales by the UK Tory Government. Every successive Tory speaker did exactly the same thing all the way through. I'm really sorry that you're so bored by the conversation on austerity that you cannot see the suffering that that policy has visited on the people of Wales and the councils who deliver its hard-pressed services. Lynne Neagle, on the other hand, provided a very realistic analysis of what the actual purpose of what we're here to discuss actually is. [Interruption.] You started the debate on that point. I sat and listened carefully to what you had to say, and that's what you said, by and large.

Local government services have an impact on all of our lives. They provide the schools for our children and the care for our vulnerable neighbours. They create the civilised spaces where we can live and work and be sociable. Of course, we recognise the challenge that local government currently faces. We set our draft budget against one of the longest periods of sustained austerity in living memory. The UK Government has consistently and persistently cut funding for public services, following an ideological commitment to reducing the role of government in our lives. We now face the consequences of those decisions. This decision has a real impact on our budget. Against that backdrop, we have continued to protect local government as best we can from the effects of that austerity.

In 2019-20 local authorities will receive £4.2 billion from the Welsh Government in core revenue funding and non-domestic rates to spend on delivering key services. This equates to an increase of 0.2 per cent on a like-for-like basis compared to the current year. In line with our programme for government commitment to provide funding for the settlement floor, the settlement includes a £3.5 million fully funded Welsh Government amount to ensure that no authority has to manage with a deduction of more than 0.3 per cent in its aggregate external finance next year. Of course this is not enough to maintain the level of local service provision that we would all wish to see, but we have prioritised local government. Our commitments to NHS spending in Wales are well known and understood; once those are met, we have given the highest priority to local government.

In the last budget round, when the UK Government made more money available between the draft and final budget, we allocated extra money to local government as part of turning a £43 million decrease in funding for local government into a £10 million increase. We have recognised in our funding decisions the specific areas where local government has said it has the most pressure, such as social services, education and teachers' pay. Outside of the local government settlement, over £900 million of grant funding is also provided in support of local authority services in 2019-20. We've invested £30 million through the health and local government partnership boards, where health and local government work together. Earlier this month we also announced additional funding above the Barnett consequential roof received from the UK Government to enable local authorities to meet the additional costs of the UK Government's pension changes for teachers and firefighters.

We worked hard to offer local government the best settlement possible, but we recognise that the settlement is a real-terms cut in core funding when authorities face real pressures from things such as ageing populations, pay awards and other inflationary pressures. This has indeed meant some hard choices for our councils. In setting their budgets, councils will have been taking account of all available sources of funding, efficiency plans, income generation and management of reserves, as well as local priorities and pressures around local delivery of services.

I join Rhun ap Iorwerth in seeking to delete point 4 in the motion. This is not an accurate reflection of the position on council tax. In fact, council tax levels for band E properties in Wales are, on average, lower than those in England, which is what the Government amendment seeks to clarify. Councils will be engaging local people in decisions about how local resources are spent and what services are provided. Hard choices are inevitable. I want to pay tribute to the councillors who engage in these difficult decisions and work hard to improve the services that authorities deliver.

Unlike in England, we continue to provide authorities in Wales with the flexibility to set their own budgets and council tax levels to help manage the financial challenges they face—flexibilities that have not been available to their counterparts in England. We do not require authorities to conduct costly local referenda, nor is the funding raised through council tax ring-fenced for specific purposes.

Unlike in England, we have maintained a national system for council tax support for those least able to pay. We have continued to maintain full entitlements for council tax support under our council tax reduction scheme. We are again providing £244 million for our council tax reduction scheme in the local government settlement. This ensures almost 300,000 vulnerable and low-income households in Wales are protected from any increase in their council tax liability, contrary to what was said on the opposite benches. Of these, 220,000 will continue to pay no council tax at all. We are making progress on making council tax fairer. My colleague, the Minister for Finance and Trefnydd, issued a written statement to provide an update last week.

I also support the principle of Rhun ap Iorwerth's amendment, calling for longer term funding settlements to support longer term planning. We recognise and are sympathetic to the calls from our public sector partners for budgeting over a longer period whenever possible in order to support forward financial planning, and our ambition is always to publish plans for longer than 12 months. However, this must be balanced with our ability to provide realistic and sensible planning assumptions in light of the continuing fiscal uncertainty, ongoing pursuit of austerity by the UK Government, and the considerable uncertainty surrounding the shape and nature of the shambolic Brexit negotiations currently being undertaken by the UK Government. The Welsh Government does not have a funding settlement from the UK Government beyond 2019-20 for revenue and 2020-21 for capital, which is why I, reluctantly, have to oppose amendment number 3, although I support the principle entirely.

I do not support the call for an independent review of the funding formula. The funding formula is reviewed annually through a partnership between Welsh local government and Welsh Government. The underlying rationale for the distribution formula is straightforward. It uses indicators of relative need, which are not influenced by local choices. These include demographic factors, deprivation indicators and sparsity. Where the data for these indicators change then so does the distribution. Each year, we renew and test the significance of existing and newly proposed indicators.

I've said many times, and I'll say it again, that, if there is anyone in local government or in this Assembly or in the wider world who has well-argued proposals for new or different indicators of spending need, then I will ask that this is considered in our continuous review of the distribution formula alongside local government, with whom I have a very good working relationship. I take some comfort in the fact, however, that urban areas continue to feel the formula favours the rural and vice versa, that southern areas feel the north is favoured and vice versa, and that poor areas feel the affluent benefit and vice versa, because, actually, local government and this Government have agreed, in partnership, what that formula looks like, and some of the people that you mentioned sat beside me in the distribution formula working group only a few weeks ago. And my colleague the Minister for Finance and Trefnydd also attended, and we had a very good meeting, where there was certainly a consensus.

I take no comfort from the sale of misinformation and misunderstanding that surrounds this formula. We have a responsibility to explain how it works, and so does every Assembly Member, every council leader and chief executive. Deputy Presiding Officer, I would like to state at this point that we will offer technical briefings on the exact nature of the formula, its weighting and how it works, to every Assembly Member, either individually or in groups or in any way that would most benefit you. I think we share a responsibility to understand the formula and make it work, and we can't pass it over to some independent panel. 

Deputy Presiding Officer, I feel very strongly that local government should be supported in terms of austerity. I feel that we need to be realistic about the cuts in the grant to this Government of £800 million equivalent a year. We have done our very best to protect local government. They have worked very well with me in my time as Minister, and I pay tribute to their continued perseverance to deliver services in the face of this continued austerity. Diolch.

Thank you. Can I call on Janet Finch-Saunders to reply to the debate?

Thank you. And, before bringing this debate to a close, I would like to thank colleagues across the Chamber for actually contributing to this very timely debate. After all, it is now when our constituents and hard-working families and pensioners will be receiving those hefty council tax bills. Now, local government underpins the delivery of our very vital public services, and is really in close contact with the people that we are also elected to represent. Now, while new data has become available from StatsWales and the Wales Audit Office, the issues that we've heard today are all too familiar. They say local government funding requires a comprehensive overhaul. As concluded by the auditor general:

'it is important that councils do not add unnecessarily to the burden placed on council-tax payers, by raising more income through council tax than is necessary to deliver council services'.

Most crucially, where councils hold significant reserves—and they say this—it is essential that these figures are reflected in their own budgets. 

Now, Dai Lloyd and several other AM colleagues blamed austerity, and that is very much an overused word in this Chamber, because, thanks to the UK Government's managed clearance of its inherited deficit—and it was inherited, you cannot deny that—it can now start repaying UK debt and increasing the spend on public services. And we cannot deny the fact that, for every £1 provided to England, £1.20 comes to Wales. So, this really isn't about whether the money's in the pot; it's how that money is then spent. 

It has been touched upon that, where councils hold significant reserves, it does seem unfair to many of my constituents, when they say, 'Well, they are holding over £100 million, why have they had a 1 per cent increase when my local authority is holding pennies compared to that and they've seen -0.3 per cent?' And when that's all calculated back into council tax increases—you know, we have an older demographic; it is so unfair and it is so wrong. But I have got to be honest with you, you are the first Minister in eight years—I think I have had five local government Cabinet Secretaries; you are the first Minister, Julie, that has acknowledged that we are concerned about the formula and that you are going to provide a technical briefing and that we are able to participate in how we feel that those indicators ought to be addressed. So, actually, I'm quite heartened, and, if it's taken our debate to do that, then that's good news. 

Now, as commonly cited, the regional variation in reserves between councils is quite shocking. Rhondda Cynon Taf: £152 million. Now, I raised it with your predecessor as to why those roll-over amounts were not being challenged. It was the same local authorities holding pennies and the same local authorities holding vast millions, and I really do think that you—. And I would ask you, please, to have a different approach and look across the board as to who is holding on, who is squirrelling away that money and then also receiving very good settlement figures. This was highlighted by Flintshire County Council's #BackTheAsk campaign, urging the Welsh Government to alleviate their financial crisis. 

Now, let's go on to education funding, because Suzy Davies is quite correct to raise the issue that there's some disguise going on there. When funding goes through to local government and then is not passed to our schools, that's even more of a scandal that's going on here in Wales. Education providers, local authorities and even the unions are up in arms about this. It is unfathomable and completely unjustified that £450 million of school funding does not even reach the classroom. So, again, you ought to be working more closely, perhaps, with the education Minister about how we get that money into those schools, because right now I've got teachers having to buy books, pens and other materials to use in their schools. 

The thing is here, we have got an issue in Wales. We have got the funding coming into Wales. The local government formula needs to be looked at, and I think that you do have an appetite to look at that, Minister. Also, though, I think you need to look, in next year's budget, at the settlement given to local authorities. All I ask for, all we ask for on these benches: let's have some equity, let's have some true equality when it comes to the spend and the distribution of the settlement across our local authorities in Wales. Thank you.

The proposal is to agree the motion without amendment. Does any Member object? [Objection.] Therefore we will defer voting under this item until voting time. 

Voting deferred until voting time.