Diolch. Our programme for government makes a clear commitment to reform council tax to make it fairer. The co-operation agreement that we've entered into with Plaid Cymru reaffirms that aim, and today I want to set out the first initial steps along that journey.

As Members know, council tax plays a significant role in supporting some of our most essential public services, from educating our children to caring for our loved ones to recycling our waste, to give just a few examples. But the system is in need of reform. It is our ambition to ensure the contributions made by the people of Wales are applied as fairly as possible. The council tax system should be more progressive in its design and it should be modernised in its delivery, having existed in its current form since 1993.

I am proud of our Welsh Government's achievements on council tax in the last term. We have removed the threat of imprisonment for non-payment, we have created a new exemption for young care leavers, we have improved access to discounts for people with severe mental impairments, and we have launched a national campaign to raise awareness of the available support, including our national council tax reduction scheme. I'd like to put on record my thanks to Members and local government colleagues for working with us on those important changes.

In February, I was pleased to publish a major piece of work, 'Reforming Local Government Finance in Wales: Summary of Findings', including work by the Institute for Fiscal Studies, Bangor University and other renowned experts in this field. It captures the important evidence that we need to identify the choices ahead of us and to inform the decisions that we need to take. We examined a wide range of options, from modest change through to fundamental redesigns, such as a land value tax. Those findings will help us think about the options for meaningful reform over the next five years, as well as the foundations we need to lay for more fundamental, longer term change.

I recently met local government leaders to gather their views from across Wales. They will be vital partners in helping to co-design and deliver what we set out to achieve. I've also begun to work closely with Plaid Cymru colleagues on this important shared priority. I recognise that this will be an important change, and that is why I am keen that these reforms are part of a national, civic conversation with the people of Wales. That is why I will consult, in due course next year, on an ambitious package of council tax reforms as the starting point of this journey to ensure everyone has the opportunity to contribute to this important debate.

An important first step, and a vital building block upon which other changes will follow, will be to look at options for a revaluation in Wales. Having undertaken a revaluation in 2003, Wales is the only part of the UK that has updated its council tax base since the 1990s, but the tax distribution in Wales is still almost 20 years out of date. Revaluing this term, and doing so more frequently thereafter, will give us the platform for change. It will give us the opportunity to add bands to the bottom or the top ends of the scale to better reflect household wealth and peoples' ability to pay—the first steps to a fairer system. We'll also look at changes to our council tax reduction scheme. We have continued to maintain entitlements to reductions for over 275,000 vulnerable and low-income households, and I'll shortly bring forward regulations to update the scheme for next year, where we will again be investing £244 million to support it.

However, the scheme was developed at pace following the UK Government's decision to abolish council tax benefit in 2013. Since the introduction of our national scheme, we have seen the beginning of the roll-out of universal credit. As the roll-out of universal credit scales up, it introduces complexity into the way that people apply for support and the way their entitlement is calculated. We need to ensure that our scheme takes full account of the impact of universal credit, but we could go further. We need to review the council tax reduction scheme to ensure it's modernised, easy to access and doesn't deter anyone from applying for their rightful entitlement to support. We will also look carefully with partners at the way in which we can modernise the updating of council tax bills, taking advantage of new technology as part of the wider work we are doing to improve individuals’ interaction with, and understanding of, key public services. Now is the right time to work together on making council tax fairer and more progressive. We need to think boldly. 

I want to be very clear—individuals will see no immediate changes to their bills. We have a great deal of work to do before reforms can be introduced. I'll also look carefully and sensitively, as we move through these changes, at the potential options for transitional support for those impacted by any changes. I'll ensure any decisions we take during this Senedd term keep open the potential for going further in the future. I'll continue to explore more radical ideas, such as a system more closely linked to land values as a more progressive form of raising revenue.

Finally, allied to our longer term considerations, I'm considering what reforms are needed to the non-domestic rates system. There are distinct linkages between these local taxes, and it's another key revenue stream for local services. The research we carried out last term highlighted real opportunities in this area, and reform will be necessary to ensure that the local tax system as a whole remains fit for purpose as we recover from the pandemic. 

As we face economic instability, inequality and a climate change emergency, we need to ensure the arrangements for local taxes are resilient, that they can protect funding for public services and help support our ambitions for a fairer Wales. These reforms will be significant undertakings that will need legislative time and the support of Members from across this Senedd. And I will, of course, keep Members informed of developments. Diolch.