Item 5 on the agenda is a statement by the Minister for Finance and Trefnydd on the annual update on reforming local government finance. I call on the Minister for Finance and Trefnydd, Rebecca Evans.

I'm pleased to publish the third in a series of annual updates on our programme of work to reform local government finance in Wales. It sets out the reforms the Welsh Government is undertaking to improve local taxes and the wider local government finance framework to ensure it responds to the future needs of local services in challenging times.

Local services are vital in giving children the best start in life, helping to lift households out of poverty, helping us to live greener and more responsible lives, and ensuring that older and vulnerable people are cared for. These services, plus many more, could not exist without a stable and effective local government funding system—one which meets our policy aspirations and strives for fairness.

Our phased programme of short, medium and long-term reform is wide-ranging, and it's been in place since early 2017. It's delivered, and is contributing to delivering, several of the commitments and aims in 'Taking Wales Forward' and in our national strategy, 'Prosperity for All'. In 'Taking Wales Forward, the Welsh Government made a series of commitments to make council tax fairer, to support small businesses with their non-domestic rates bills and to deliver city and growth deals for regions across Wales.

The update I've published today outlines the progress we've made over the past year in working towards our aims. I'd like to take this opportunity to thank local government colleagues for their continued assistance in delivering significant improvements. Local authority officers and elected members across Wales have taken an active part in this work and have co-produced many of the improvements we see today. I'd also like to thank Citizens Advice Cymru, Money Saving Expert and other advisory services for providing much-needed practical input on the ground.

This year's report sets out the steps we have taken to make council tax fairer. On 1 April this year, we removed the threat of imprisonment for the non-payment of council tax in Wales, marking a step change in our approach to the treatment of local taxpayers. For the first time, all local authorities in Wales have adopted a common council tax protocol that captures new standards for how vulnerable and struggling households will be treated.

We continue to work with local authorities to deliver improvements to council tax collection and debt management, and to reduce bailiff action. The level of arrears has stabilised in Wales over the period since before council tax support was localised in 2013-14, whereas the total amount outstanding in England has increased by 36 per cent.

In partnership with others, we have also delivered a national campaign to raise awareness of council tax support, and I'm pleased to relaunch this campaign today. The next phase will be targeted at low-income households and households on universal credit to ensure that we highlight the full range of support that could be available to people in meeting their council tax obligations. Our campaign so far has seen over 60,000 people benefit from access to the information on our website.

Through our council tax reduction scheme, we've continued to maintain entitlements to reductions for vulnerable and low-income households across Wales. We'll shortly be bringing forward the regulations to update the scheme for next year, and we will be again investing £244 million into the scheme.

One in five households in Wales receives help with their council tax bills through this scheme, and around 220,000 households pay no council tax at all. This scheme operates in addition to the range of other discounts and exemptions available. Together, they mean that well over 0.5 million households in Wales receive some form of reduction to their council tax bill. Our awareness campaign is helping ensure that everyone understands their entitlements.

We've focused on making council tax fairer for vulnerable groups. In April, we delivered new exemptions for care leavers. Working with local government, we've also launched a standardised application process for discounts and exemptions for people with a severe mental impairment. Both of these groups can now expect to be treated consistently throughout Wales, no matter where they live.

In 'Taking Wales Forward', we committed to supporting small businesses with their non-domestic rates bills. We legislated in 2017 to make our temporary small business rate relief scheme permanent. In 2018 we delivered an improved scheme that provides enhanced rate relief for childcare providers, demonstrating how we're using all of our policy levers in a joined-up way to create the most generous childcare offer anywhere in the UK.

We're responding to the struggles of our high streets and town centres through continued investment in targeted regeneration. We have supported this by extending our high street and retail rates relief scheme into a third year and making it more generous. We want to help businesses sustain the facilities people want and need, to drive prosperity, tackle poverty and reduce inequality. In total, we are providing over £230 million of relief this year to support businesses with their rates.

A key part of our programme is an ambition to explore more fundamental reforms for the next term and beyond. I'm pleased to have joined forces with expert institutions, including Bangor University and the Institute for Fiscal Studies, to delve deeper into ideas such as local taxes based on land value, more progressive council tax, or local taxes based on income. I intend to explore these openly, and in an applied and practical way for Wales. I'll ensure that all research reports are made available to Assembly Members as they are published. Much of the report I've published today highlights changes we have made to the local taxes—council tax and non-domestic rates—which fall within my portfolio. These changes are set within a broader context, though, of local government reform.

The Minister for Housing and Local Government will shortly introduce the Local Government and Elections (Wales) Bill to this Assembly. It will provide a new framework for collaboration between authorities, recognising the regional arrangements that already exist for some local services in some parts of Wales, and reflecting other emerging developments, such as city and growth deals. The Welsh Government has always strived to give local government the best financial settlement it can, through more than a decade of UK Government austerity. We have also worked to provide local government with the tools it needs to tackle the challenges of rising and more complex demands.

I know that many colleagues in this Chamber have their own views and ideas on how local services should be funded in the future. Each of the challenges in the programme has been, or will be, consulted upon in detail. I welcome all contributions to the thinking on this important matter, from anyone at any time. In relation to alternative approaches, it remains the aim of this Government to publish our evidence in autumn 2020 to inform the debate ahead of the next Assembly term.

Local government must be enabled to deliver better public services for everyone. This programme of work makes a contribution to the strategic aims of this Government, and we are using every lever we have to make Wales a more equal, prosperous and greener society.

Can I thank the Minister for her statement this afternoon and for the annual update—the latest, as you say, in a sequence of updates? As you said, local services are vital in giving children the best start in life, helping give us a greener, more responsible environment and lead more responsible lives—I think we could all agree with that phrase that you use. And, yes, I would agree with you that we do need a stable and effective local government funding system. Some of us think that we are still some way off that today. I appreciate that, over recent years, funding has been tighter than in the past, but the Minister will be aware of my repeated calls for a review of the local government funding formula—well-worn calls now. I know that Mike Hedges has some different views on this, but I would like to hear from the Minister on whether there is any intention to look again at the current formula or current formulas that make it up—I know it's complex—particularly factoring in issues such as sparsity and rurality and the costs of delivering services over larger rural areas, such as we have in my part of Wales and particularly up towards mid Wales. So, I'd be interested to hear an update on that.

You moved on to discuss council tax and business rates, and we know that council tax has increased by around 6.6 per cent in 2019-20, or £99 for an average band 2 property. So, I would ask you, Minister, is it really fair and progressive or is council tax actually being used as a tool to make local people in local authority areas actually shoulder more of the burden over time, thereby freeing up money centrally? If that is what the Welsh Government aims to do, then that's a policy objective that you should be clear about, because it was only in your statement last year that you said you wanted to explore the balance between locally raised and centrally provided funding. So, are you still looking at that, because it does seem to be that, over time, the burden is shifting from central Government to local government, which I don't think the Labour Party of the past would have supported?

In terms of council tax arrears, which you mentioned, you say that the level of arrears has stabilised over the period since before council tax was localised in 2013-14. This may well be the case, but I would also remind the Minister that the Wales Centre for Public Policy has criticised the Welsh Government approach to handling council tax arrears. In fact, it says that, despite Welsh Government producing guidance on this, the extent to which Welsh Government is achieving its aim is being questioned, and there is a potential postcode lottery in place when it comes to people in debt. So, could you update us on the work of the working group that you established to look at this? I'm sure you'd agree that it's vitally important that some of the most vulnerable people in society, some of those at risk of the most severe debt, are being treated equitably and having access to that support that they so desperately need.

Moving on to non-domestic rates, I'm pleased that you recognise the struggles of our high streets and town centres. Those are well documented, and we welcome additional support for our high streets, because they are really suffering at the moment. The retail rates relief scheme needs to be more generous, because businesses need as much support as they possibly can get at this time. Will you look again at targeting support to those businesses in those areas that have been worst hit—in some cases, pockets of areas within otherwise more successful areas in terms of our high streets? I know that, when this was looked at a few years ago by the Enterprise and Business Committee, we exposed some of the issues affecting our high streets. Since then, of course, we have the issues with the rate revaluation, and pockets in my constituency, like Chepstow, were particularly affected.

We look forward to the introduction of the local government and elections Bill that you mentioned. I hope that it does provide a better framework for supporting collaboration between local authorities and also underpinning the city region model, such as that that is operating in south-east Wales. I think there are opportunities here to provide better support in the future.

Finally, Dirprwy Lywydd, on the council tax reduction scheme, you mentioned uptake. Current uptake is between 55 per cent and 66 per cent, I believe, so I welcome your relaunching of the campaign today to try to raise the profile of that reduction scheme. I think that certainly has to happen. I'd be interested to know more the reasons why you think that uptake is below what it has been in the past and some of the policies that you propose bringing forward to make sure that people who do need that support, who deserve that support and are most in need of that support, are going to be able to know it exists and access it when they need it.

Thank you very much to Nick Ramsay for the series of questions. The first related to the issue of the funding formula for local government, and the Minister for local government and I have been very clear with local authorities throughout that, should they want to come forward with ideas as to how the funding formula should be amended, then, obviously, we are open to those discussions. I think the distribution sub-group that we have with those bodies is a perfect opportunity to have discussions in that regard. There's not that appetite in local government at the moment for a review of the funding formula, but, as I say, the door is open for discussions if there are ideas as to how the funding formula could be changed in future.

There were a series of questions relating to council tax, and particularly in relation to the council tax reduction scheme. That's been a tremendously successful and important scheme. Of course, we make a contribution to local authorities of £244 million through our annual settlement to fund that scheme.

It is true to say that the number of households receiving council tax reduction help has fallen in all local authority areas, actually, since 2013-14, but we have undertaken—or commissioned, I should say—some research from Policy in Practice, which will allow us to understand how we can help to improve the case load and where changes might need to be made in future to ensure that it remains fair for all households. Because one of the reasons, I think, that we've seen the fall in numbers of households benefiting from the support that is available is the roll-out of the UK Government's welfare reforms. It impacts on a family's or an individual's ability to navigate the full range of support that's available for them, and one of the reasons is that eligibility for the council tax reduction scheme is directly linked to the UK benefits system. So, as a number of benefits, including housing benefit, are gradually being replaced by universal credit, it's important that we understand the impact that that is having on the uptake of the council tax reduction scheme.

That's one of reasons why, in January, we commissioned the research to shed some light on that issue. It’s a year-long study, and it will involve a significant amount of data analysis to track the circumstances of Welsh households as they are migrated from those legacy benefits on to universal credit. But, as I committed in my statement, when we are in a place where we can share information on those reports, I'm absolutely committed to do so, because I know that there's interest on all parts of the Assembly, really, to get this right.

The Institute for Fiscal Studies, I have to say, estimates that 3.6 million working-age households in England, who would have been eligible for support under the old council tax benefits system, are now entitled to an average of £196 a year less, so I think that our system is definitely more progressive in Wales. But I think that we can do more to make it more progressive in the longer term. So, one of the areas we're considering is the impact of revaluation. Properties liable for council tax are placed, currently, into one of nine council tax bands, based on the property values assessed by the Valuation Office Agency. They're based on property values at 1 April 2003. That's, obviously, much more recent than the situation in England and Scotland, which have values from 1991. But we are considering what difference a revaluation would make in Wales, because it is a huge undertaking. So, again, we've asked the Institute for Fiscal Studies and the University of Sheffield to provide us with some insights into that to inform our consideration on the way forward, and alongside that we're looking at things such as local land value taxes or local taxes based on income to try and ensure that we do have a more progressive system in the long term.

In terms of arrears, debt management and enforcement are absolutely crucial. It's something that I've particularly taken an interest in in my time within this portfolio. Over the course of this year we've introduced the legislation that means that the threat of imprisonment for the non-payment of council tax has now been removed. I think that's really progressive—getting into debt isn't a crime. Imprisonment is a really outdated and disproportionate response to dealing with civil debt, and there are other much more appropriate ways in which we can be dealing with that.

But we've also, crucially, introduced a new council tax protocol for Wales, and that was developed in collaboration with local government and has been endorsed by the Welsh Local Government Association, and it has been implemented in every local authority in Wales. And that's about good-practice support for families who are struggling, families who have been finding it difficult to make their council tax payments, and it's about trying to get in there at the earliest possible stage to provide those individuals and those families with the support that they might need in order to be able to pay their council tax in the future.

There were a series of questions as well on non-domestic rates, and, of course, we're really pleased to have introduced our permanent small business rates relief scheme. It's providing over £120 million of relief this year, fully funded by the Welsh Government, which, of course, isn't the case over the border, where you see some businesses, their contributions, being used to support other businesses. More than 70,000 ratepayers across Wales now receive some kind of relief, so that's half of all businesses in Wales paying no rates at all, compared to around a third of businesses under the scheme in England. So, again, I think that we've been able to offer a generous approach to small business rates relief here in Wales.

The issue of revaluation for non-domestic rates—well, it's something that we clearly were working towards, bringing forward the next revaluation for non-domestic rates in 2021 rather than 2022. And bringing that date forward means that, obviously, we can produce bills that are based on more up-to-date market conditions, and, obviously, it enables those ratepayers to plan ahead. However, the suspension of Parliament in September means the necessary legislation fell at that point, and the decision then to reintroduce it will be a matter for the new Government. So, we're working very closely with UK Government officials to try and ensure that a legislative opportunity does present itself to legislate to undertake that revaluation as soon as possible.

I thank the Minister for today's statement. We are discussing how to bring funds into the coffers of local authorities, and we can't ignore the pressures that there are on how that money is then spent. And we can't look at local government finance in isolation in that sense. The Government, in everything it does, in health expenditure, in housing expenditure, does have to behave in a far more preventative way in order to take some pressure off the budgets of local authorities, which have to step in very often at a time when it's very late in the day and where problems could have been resolved far sooner.

But, in turning to the system that we have in place at the moment, we in Plaid Cymru have felt for many years that council tax is a regressive tax. We don't believe that this is the best way of bringing funds in. We don't think it's fair that the pressures lie within society, and where the greatest demands are on people. Likewise, we do look forward very much to being in Government, using the capacity that the civil service has in order to look at how we can introduce a truly transformative system for business rates. We have supported and have pushed for business rate relief for many years, but the fact that that relief has to be provided at such a major scale does suggest clearly to me that there is something wrong with the business rates system itself.

I welcome the fact that a step was taken earlier this year to remove the threat of imprisonment for non-payment of council tax. That was certainly the right thing to do. It's also important that the work to raise awareness of council tax does happen, particularly in those communities where there are a high number of low-income households, which very often are very uncertain as to where to turn for support and assistance. It's also to be welcomed that the Government has delivered exceptions and exemptions for young people leaving care, but there are always ways, while we await that broader change to the system, of bringing in funding for local government. It's always important to look for new ways of understanding specific problems faced by certain groups.

I will conclude my comments by drawing one particular concern to your attention. A constituent contacted one of my fellow Members about council tax reductions. The partner of this constituent is disabled, and she is the main carer. The individual got in touch, saying that she didn't qualify for any sort of council tax reduction because the rules don't allow for such a reduction to be given where the main carer is caring for a spouse—a husband or wife. Now, is the Minister aware of that and, if so, can the Welsh Government, or will the Welsh Government, consider some steps to address that particular concern?

Thank you to Rhun for raising those issues. I think the point that he started off with is really important, in the sense that we can't just look at local government in isolation from the other parts of the public sector and beyond, because of course the issue of prevention was very much recognised. I think that we're doing really hard work across Government to ensure that we're focusing our efforts on prevention. So, within the budget context, of course, I'm particularly keen that we look at preventative spend. I know that the future generations commissioner has a close eye on this particular issue as well. So, it's important to recognise that this sits in a wider context, as Rhun ap Iorwerth certainly did. 

Yes, I agree, council tax is a regressive tax, and that's why we're looking so closely at what we can do to make it more progressive in future. One of those things would be about looking at the impact of revaluation of what the opportunities are there. So, potentially creating new bands or creating a new system entirely. So, without the revaluation of the 1.4 million domestic properties we have in Wales, we're constrained, I think, in making very fundamental changes with particular regard to that system, and we obviously wouldn't want to commit to a revaluation without some understanding of the impact, and that's why it's so important that we've commissioned those two pieces of research that are described in the report in front of Members today, from the Institute for Fiscal Studies and the University of Sheffield, to help us to inform our thinking as we take that forward.

But that's not the only way in which we could potentially make taxes more progressive, of course. I know there's lots of interest in a local land value tax and, to that end, we've commissioned Bangor University to explore whether local taxes in Wales could be based on the value of land, rather than the current position, which is an amalgamation of both land and property value. The objective of Welsh Government in exploring land value tax as a replacement for one or both local taxes is primarily to raise stable revenue for local services in the fairest way. But, obviously, I think there are potentially other advantageous outcomes that could be considered. Bangor University expects to publish that detailed report towards the end of the year and, obviously, I will share it with colleagues. And we continue to monitor the debate in terms of local land value taxes elsewhere. So, we've got ongoing links with Scotland. The Scottish Land Commission has particularly taken an interest in local land value tax, so we're very much considering the work that is there.

Another way in which we're considering a potentially more progressive system in future would be local taxes based on income. We're currently at the start of that piece of work, so we're seeking to commission external expertise to undertake some independent research. So that would be similar to the other pieces of work that I've described. But we're very clear that, were we to consider local income tax, it has to be explored very much as a local regime. So, administered locally, used to fund local services and local authority expenditure, supporting local decision making and raising similar revenues to the current system. So, again, we've got some work that was undertaken by the Wales Centre for Public Policy, and that explored this issue. But, again, this is part of the work that we're hoping to pull together as we consider the way forward.

Now, I've just described three potential ways of making the system more progressive, and each of those is a huge undertaking and would probably take at least one Assembly term to get through that potentially major change. So, as Rhun ap Iorwerth said, it's important that, in the short term and in the time that we have immediately, we do look to do things that make tax more progressive. So, the other things that we've talked about in terms of care leavers, the work that we're doing to ensure that people who are eligible for council tax reductions are aware of that and do claim that, I think, is really important. But, in terms of the specific circumstance that was described, I'll certainly take a look at that. If you could perhaps send me an e-mail with the details of the particular case, I'll explore what might be possible there. 

I often think that, if finding an alternative funding mechanism for local government was easy, it would have been done a very long time ago. And I think that that's something that we perhaps need to give great thought to. I remember when the aggregate external finance replaced the rate support grant following the centralisation of business rates to balance up income in those authorities that had the least ability to raise local tax.

The distribution of properties in each band varies enormously and, whilst some authorities have over half their properties in the lowest two bands others, notably Monmouth, have over half their properties in band D and above. We would thus expect the councils to get the largest Welsh Government support per capita to be Blaenau Gwent, Merthyr and Rhondda Cynon Taf and the three lowest per capita to be Cardiff, Vale of Glamorgan and Monmouth, and that's what we effectively get. 

We know that council tax hits the poorest households particularly hard, with low earners paying an average of 7 per cent of their income in council tax, whilst the wealthiest households pay only 1.5 per cent. On council tax, I have the following suggestions: I would suggest a band J at £1 million, a band K at £5 million and a band L at £10 million. This would mean that those in very expensive properties would pay substantially more. An alternative reform would be a mansion tax surcharge of, say, 1 per cent on the value of properties worth over £1 million or £2 million, 2 per cent on £2 million and 3 per cent on those properties worth over £3 million. Will the Minister consider these suggestions?

On local income tax, while appearing to be a fairer system, income tax, like corporation tax, is easily avoided, and often is. Non-domiciled people owning mansions in Wales could end up paying nothing. It would shift the balance of payment on to those on lower and middle incomes. I would urge the Minister to rule out a local income tax because it will be the middle-income people who'll be paying for those who are capable of avoiding paying tax on huge sums of income.

Something we talk about regularly, and I thought Siân Gwenllian would have raised it today, is: can we remove small business rate relief from flats and houses, to remove the incentive to move them from being holiday homes into being businesses? My view is that there's no good reason to keep on giving them rate relief.

Our land value tax has a lot of benefits but if you use that to replace council tax, you'd have no social housing in some of the most expensive land areas. People would not be able to afford to pay the council tax on those properties in the areas where we've got very high land values; I know you've got those in your own constituency, Minister. So, I think that what you'd end up with, by default because of a decision, is that in those more affluent areas and very affluent areas where land values are well in excess of £1 million an acre, you would have no social housing whatsoever.

So, I think that a lot of these things need investigating, but I think sometimes the downside of some of these needs to be looked at, or why we are where we are now. 

I thank Mike Hedges for his contribution there, and he began by talking about the variation in council tax levels. That's certainly something that we're very mindful of. The average for a band D property ranges from £1,092 in Pembrokeshire to £1,648 in Blaenau Gwent, and I think that that is partly as a result of the 1996 reorganisation that created a very mixed landscape in terms of the size and characteristics of those 22 unitary authorities, including some very small authorities with high relative need for local services and a small tax base. So, that's something, obviously, we're mindful of, but it also reflects the flexibility that has been given to local authorities in terms of setting council tax in their own areas. Of course, they're political decisions and the setting of council tax is very much political in nature in many cases.

Mike Hedges's contribution demonstrated really clearly the complexity of this issue, and the fact that all of these issues and all of these potential ways forward need to be explored fully to understand all of the potential implications, both positive and negative. And it's really important to do so in a way that looks at the different types of households, and the way in which different types of individuals might be affected by any particular change. But I'm really clear that we just don't seek to make change for the sake of it, but we seek to make change to ensure that the system is a better one than the one we have at the moment.

On the issue of small business rate relief for second homes particularly, I know that this is an issue that we debated with some vigour in the Assembly in a debate sponsored by Plaid Cymru very recently. It is the case that when we looked at this previously, I know that some consideration was given to removing rate relief from certain types of properties, but what the Welsh Government has tried to do is strike a balance between supporting the local tourism industry locally, but then also understanding the pressure that local authorities have in terms of ensuring that there is adequate housing within their areas.

In terms of the tourism sector, obviously, the significant benefits are recognised in our economic action plan, and the availability of good-quality, readily available self-catering accommodation is a really important part of the tourism offer that we have here in Wales. The latest official statistics indicate that self-catering accommodation accounted for almost £370 million of tourism spend here in Wales in 2017. But that said, we're very aware of the challenges that high percentages of second homes can cause in some communities that aren't reliant on tourism. So, we've discussed at length that Welsh Government is considering the way forward in this regard, and ensuring that those people who are claiming rate relief actually are doing so genuinely. I think the main concern that people have is the suspicion that there are people who are claiming rate relief for properties that do not genuinely meet the criteria. That was, I have to say, agreed by this whole Assembly in terms of trying to strike that balance between the local housing need and the importance that tourism plays for various communities across Wales. 

Mike Hedges provided some additional ideas as to how to take things forward. I said in my statement, and it's clear in the report today, that I welcome any ideas from any Member or any interested stakeholder at any time, and I'm really keen to have those discussions as to how we can improve the system and make it fairer, more progressive, and ensure that our non-domestic rates system and our council tax system contributes to our wider Welsh Government goals as well.

One of those additional suggestions was having a new council tax band for properties worth more than £10 million. Could I suggest, before bringing that in, we check to see whether there are any such properties in Wales?

I share the Minister's discomfort about imprisoning people for not paying their council tax. She said we shouldn't imprison people for getting into debt, with which, I think, people would generally agree, but traditionally a distinction was drawn in terms of whether people could be imprisoned for not paying their taxes, and I just wonder, as the Minister looks at the level of arrears, what would happen in a scenario when someone just refuses, doesn't want to pay their council tax, doesn't respond to anything, they get fined, they don't pay the fine, if they get community service and they don't turn up to that. What ultimately can make people pay, particularly those who are recalcitrant rather than those for whom we may have more sympathy?

You referred that the level of arrears have stabilised in Wales over the period since before council tax support was localised in 2013-14. Wasn't that an issue of localising it in England down to the local council level and didn't we instead in Wales bring in a national council tax reduction scheme? So, I'm a bit perplexed about the reference to localising this in respect of Wales. I wonder, when looking at these increases in arrears in England by 36 per cent, whether the Minister has any access to evidence of what types of schemes have worked well or not in different places in England and how those compare to her own council tax reduction scheme here.

You say that's going to be £244 million again next year. Will the Minister confirm that that will represent a real-terms cut? In terms of the distribution of this money, clearly, representing south-east Wales, I welcome people in poorer council areas getting substantial support from Welsh Government. I just note, though, that some of those councils have the highest levels of council tax in Wales. Could there be any connection between those? If substantial numbers of people aren't having to pay council tax, does that reduce the democratic resistance to higher levels of council tax? And particularly in an area like, say, Blaenau Gwent, with very large proportions of council tax B band terraced housing, a lot of people in those houses, really struggling but perhaps are just above the level, are paying a lot higher council tax. Could there be any interrelationship between those two points?

You referred to the standardised application processes for discounts and exemptions for people with a severe mental impairment. I infer from that that there isn't a standardised approach for others. If we have one national scheme for Wales, if the Minister has decided that there are not advantages to allowing councils to have their own scheme to reflect local circumstances, is there any advantage in having lots of different ways of applying for reductions for everyone else except those who have a mental impairment?

The research reports made available to Members as they're published, I think those are regarding the different taxes that fall within your portfolio and these changes you want to set within the broader context of local government reform. Shouldn't we also set them in the broader context of tax devolution, and in particular the land transaction tax and the interrelationship, potentially, with that and council tax, when you're looking at these things in future? And can you clarify whether those references are different from the one later on, where you're talking about local services and how they should be funded for the future? And there, we're going to get the research reports all in autumn 2020—is that a separate thing? And is that relating just to the council tax formula, potentially, or are you looking at wider issues of what the split should be between council tax, business rates and Government grant in terms of the financing of local authorities?

Thank you to Mark Reckless for raising a number of very interesting issues there. Of course, he began by welcoming, really, I think, the fact that Welsh Government had removed the sanction of imprisonment for the non-payment of council tax.

But I think it's important to recognise that the council tax system and the system that we have of enforcement of debt, particularly, is intended to ensure that there is payment secured from those people with the means to pay. And we do have evidence from committal proceedings that indicated that, in many places, the process previously was being applied inappropriately to people who just simply didn't have the means to pay. And, of course, that, then, is an additional burden on the public purse in terms of imprisoning individuals. It does nothing to address the underlying issues as to why that individual finds themselves unable to pay the debt in the first place. And, of course, in many cases, it just serves to make the situation worse.

In September this year, the Money Advice Trust published a new report called 'Stop The Knock', and many of those recommendations were focused in England, but actually there were several in Wales, which were addressed to the Welsh Government and we've already started to take those things forward. Part of that work is the council tax protocol for Wales, which I mentioned in terms of setting out the way in which local authorities should now deal with those individuals who find themselves unable to pay council tax. And it is about being unable, not unwilling, to pay council tax. And we're working really closely with local government now to ensure that that protocol is very much embedded in the way local authorities work. The early identification of those individuals whose financial circumstances mean that they might struggle to pay council tax is really important in that agenda as well.

Local authorities do have discretionary powers to reduce or exempt individuals from paying their council tax. We had an example earlier of a particular individual who found themselves in a circumstance where they were struggling to pay council tax, so their local authorities are able to offer individuals that benefit, should they decide to do that.

Council tax arrears haven't risen to the extent that's been reported in England, and that's partly due to the fact that our reduction scheme is so successful and that we have managed to retain that support for low-income households. I think it's important to recognise, as well, that council tax collection in Wales, the rates are actually very, very high indeed, and certainly higher than in England and Scotland. Of course, we can't compare to Northern Ireland because they have a different system of tax there. So, I think that, in terms of collection, our rates are very high.

The standardisation of the SMI application form was really important because previous to that, particularly with regard to serious mental impairment, local authorities—the staff themselves—weren't often aware of this particular benefit that was available to people. When they were, they weren't necessarily dealing with those people in a systematic and clear way across Wales. So, that's the reason why we've introduced that particular standardised form, and that was with the support of Money Saving Expert, which recognised, I think, that for these particular individuals, who often are some of the most vulnerable people, there wasn't the level of understanding and that they weren't being treated consistently across Wales.

Now, I think the protocol provides a framework to ensure that other people are treated consistently across Wales with other reasons as to why they should have help with their council tax. And again, the point was made that local taxation has to be seen in the wider contact. So, in terms of local taxes sitting alongside our Welsh taxes and the Welsh rates of income tax, those things together, I think, provide us with a suite of measures. And, of course, we've set out our plans in terms of the additional taxes that we might look to introduce in the future, were we able to get those powers devolved to Wales. So, absolutely, the whole tax picture has to fit as a jigsaw, given the spending commitments that we have and the pressures that we have as a Government.

In terms of the research, by the autumn of 2020, we will have, I think, all of the research reports I've described together, so we'll be able to look at them as a suite and hopefully set out, potentially, the direction as to where we would like to take things next. So, it could be about ruling out some of the ideas for some of the reasons that Mike Hedges highlighted earlier, or it could be a case of having to pinpoint particular areas where we feel that more work may need to be done, and hopefully those reports will help all political parites in their thinking as we head towards the next Assembly elections.

Thank you very much.