1. What assessment has the Welsh Government made of the impact of Covid-19 on its local taxation policy? OQ55374

We're working closely with local authorities to monitor the impact of COVID-19 on the income from local taxes. Our package of rates relief is providing £580 million of support to ratepayers during 2020-21, and our council tax reduction scheme provides guaranteed support to low-income households.

Thank you, Minister. Local authorities were already struggling financially pre-pandemic. Services were being cut, yet our constituents found their council tax bills skyrocketing. The coronavirus outbreak has placed an enormous strain on local authorities as they form the front line in the public defence against the pandemic. Councils across Wales have risen to the challenge of supplying food to the shielded, housing the homeless and tracing the sick. Council services will cost more than they did pre-pandemic, as the cost of mitigation measures have to be factored in. Minister, can you assure the people of Wales that the Welsh Government will fund the additional expense, that council taxes will not go up as a result, and that my constituents—many of whom are already struggling financially—will not have to foot the bill? Diolch.

I thank Caroline Jones for raising this issue. Local government finance is particularly important during the COVID-19 crisis because they are very much, alongside their colleagues in health, on the front line in terms of supporting people and our communities. And that's one of the reasons why I've been able to recognise that pressure by providing over £180 million thus far to the local government hardship fund. That fund allows local authorities across Wales to draw down funding to support them, for example, in meeting the additional costs of providing social care, in terms of providing additional accommodation to help people who are rough-sleeping off the streets, and also to help them in their desire to support low-income families who are now eligible for free school meals. 

Alongside that, we recognise that local authorities have also experienced a significant amount of lost income. In normal times, local authorities would be getting income from the leisure centres, the catering services they provide and from parking and so on. So, a significant amount of that £180 million is there to support local authorities with the income that they have lost this year as well. I'm pleased that we've been able to ensure that local authorities haven't had the kind of 10 years that local authorities across the border in England have had, which means they are better placed to face this crisis, but I absolutely recognise that they need to do it with Welsh Government as their partners.

Caroline Jones has focused on the council tax aspect of the local taxation issue. If I can focus on the business rates side of things, the Welsh Conservatives have long called for a whole look at the structure of business rates in Wales and business rates support, and the possibility of taking businesses with a rateable value of less than £15,000 out of paying altogether.

Minister, I appreciate that at the moment it's a very careful balancing act that you've got to do, between making sure that local authorities have the right level of taxation and that businesses are supported. Can I ask, as we come out of the pandemic and come out of the lockdown, that you do look again at the way that business rates work in Wales, so that those businesses that need as much money as possible at the moment to invest in the future and to employ people will be able to do so? And I think that a look at the whole business rate regime and easing the burden on businesses is one way that you can do that.

I'm really keen to explore what more we could do or what we could do differently, in fact, in the field of local government finance, and particularly of course non-domestic rates, but also council tax, because they are two pillars that support local government. That's one of the reasons why I commissioned a range of research that will help us understand what the options are for the future. So, we have Bangor University looking at the potential of a local land value tax and we published that report in March of this year. The Institute for Fiscal Studies has undertaken some research on council tax revaluation and reform, and that was published in April of this year. And then Policy in Practice has been doing work, looking at the council tax reduction scheme. There was an interim report published in January and we expect the final report to be published very shortly. And then another piece of work that we expect in September looks at local taxes based on income, so that would be quite a radical approach there.

So, I'm really keen that all of these pieces of research are there in the public domain—there for all parties and all interested parties to be considering ahead of the next Senedd elections, so that we consider what the way forward might be. I'm not interested in change for the sake of it, but I do recognise that there are significant improvements that we can continue to make to non-domestic rates and council tax.