Before I start, I hope you will join me in thanking local government for the critical work they do day in, day out for communities, people and businesses across Wales. Local authority staff work for their communities throughout the year, from refuse and recycling teams, teachers and social workers, to enforcement officers and housing teams. This is true each year but never more so than over the past year, as councils, their staff and elected members have responded and are continuing to respond to the impacts of the COVID-19 pandemic. And it is not just those in the front-line roles, either. Without those in what we often call back-office jobs, we would not have been able to get support out so quickly to businesses across Wales or able to provide food to vulnerable and shielding households, or had such successful test and trace arrangements contributing to the ongoing reduction in the numbers of cases of the coronavirus. We cannot forget either that many authorities have also responded to the unprecedented flooding that has afflicted so many residents and businesses in Wales over the past 13 months. This has had a huge and sometimes repeated impact on many communities.

In preparing for the Welsh budget and this settlement, the Government has engaged with local government throughout the budget process. Cabinet colleagues and I have considered with local government leaders, through the partnership council and its finance sub-group, the position for local government overall and on key services, such as education and social care. I hope that these wide-ranging strategic discussions will continue during the coming year in preparation for a comprehensive spending review. 

This year, I am pleased to be able to propose to this Senedd a settlement that means that, in 2021-22, the increase in the general revenue allocation to Welsh local government will be 3.8 per cent. This is the second-highest increase on a like-for-like basis in 14 years; the highest, of course, was this year. This is a good settlement for local government, and local government has welcomed it. It provides local government with a solid platform for the forthcoming financial year to continue to deliver the front-line services Wales needs. In 2021-22, local authorities in Wales will receive £4.65 billion in general revenue allocations from core funding and non-domestic rates. This baseline settlement increase of £176 million reflects an increase in the revenue support grant to respond to the negative impact of the pandemic on non-domestic rate collection. It also accounts for the impact of freezing the NDR multiplier. Through this settlement, we're also continuing to provide £4.8 million for authorities to deliver additional discretionary rates relief for local businesses and other ratepayers to respond to specific local issues.

The Minister for Finance and Trefnydd has been clear that one of the hard choices we have faced in setting our spending plans for next year is our approach to public sector pay. The reality is that we did not receive any additional funding through the Barnett formula to provide for public sector-wide pay awards next year, given the UK Government's decision to pause public sector pay rises except for the NHS and those on the very lowest wages. Last week's budget confirmed that the UK Government intends to cap pay increases in the NHS at 1 per cent and maintain the pay freeze in local government. People in Wales and most of us in this Senedd will be appalled at this failure to recognise the contribution of public sector workers throughout the past year. Pay negotiations in local government are conducted by local authorities across England and Wales. I regret the stance taken by the UK Government. The Welsh Government has done all it can to protect the funding for local authorities. The implications of pay awards in 2021-22, whatever they turn out to be, will need to be accommodated within authorities' budget planning in the light of this settlement.

In determining the distribution of funding across authorities for the settlement, we have directed funding into the schools part of the formula to recognise the decisions made on the 2020-21 teachers' pay deal. We are also continuing to provide funding for our proposals for new eligibility criteria for free school meals, given the continued delay to the roll-out of universal credit by the UK Government. Through this settlement, every authority will see an increase of at least 2 per cent over 2020-21 on a like-for-like basis, something that would have been unthinkable in the 10 years prior to 2020-21. I know that some authorities have commented on the variance between the highest and lowest increases. The improved estimate of relative population means that authorities with relatively higher population growth are seeing this reflected in their funding. As is always the case, these changes have been agreed with local government through the distribution and finance sub-groups. We should all be confident that our framework for distribution is based on transparent and publicly shared data that has been agreed and developed in partnership with local government.

Senedd Members may indeed contrast this arrangement with the pork-barrel approach to local funding that appears to characterise other Government administrations. In this context, I have given careful consideration to the potential of including a funding floor for the settlement. The principle of a funding floor is to ensure that no authority suffers an unmanageable change from one year to the next. I have decided not to include a funding floor in this instance. In addition to the core unhypothecated funding delivered through the settlement, I am grateful that my Cabinet colleagues have provided earlier indicative information on revenue and capital grants planned for 2021-22. These currently amount to over £1 billion for revenue and over £760 million for capital for our shared priorities with local government.

Turning to capital, general capital funding for 2021-22 will be set at £198 million. This includes £20 million for the public highways refurbishment grant and a continuation of an additional £35 million provided for in the budget for 2020-21. This will enable authorities to continue to respond to our joint priorities of decarbonisation, the climate emergency and economic recovery following COVID-19.

The relationship between Welsh Government and local government has only been strengthened by the events of the past 12 months. I hope this positive relationship will continue beyond the term of this Government. It is because of this positive relationship that, in Wales, we recognise the need to support local authorities to respond to the pandemic. We knew that local government had the people and the skills to respond. This financial year, we have made available over £600 million to local government to enable them to do so. It has supported authorities to replace their lost income and meet additional costs from their core services. It has funded support for businesses and individuals, for schools and for families. I am very proud of the way local government and Welsh Government have responded together to the challenges of the COVID-19 pandemic. I hope that we can continue to work together to meet the challenges of the future, in particular to build a greener and more equal Wales.

I am aware a second good settlement in as many years does not make up for 10 years of the UK Government's austerity agenda, however. Having been part of setting a council budget, I know the challenges local authorities will still have had to make in setting their budgets. The setting of budgets, and, in turn, council tax, is the responsibility of each local authority. Authorities will be balancing the need to invest in services and service transformation with the financial pressures on local residents. Pay levels are only now at the level they were before the financial crisis, and council tax increases will be carefully considered in that context. The confirmation in the Welsh budget of over £206 million for the continued provision of the local government hardship fund will ensure that the financial impacts of the pandemic on local government will not be an added pressure on council tax payers. As I have said on more than one occasion, no-one goes into politics to want to cut services. I am proud that, through supporting local government, we are maintaining and delivering the services the people of Wales want and need. This final local government settlement is a core part of our budget to protect public services and our economy, to build a greener future and create change for a more equal Wales. I ask the Members of this Senedd to support the motion. Diolch.