The following amendment has been selected: amendment 1 in the name of Lesley Griffiths.

We shall move on now to item 7, the Welsh Conservatives debate on local government funding. I call on Sam Rowlands to move the motion.

Motion NDM7923 Darren Millar

To propose that the Senedd:

1. Thanks councillors, local authorities and their staff across Wales for their role during the coronavirus pandemic.

2. Believes that Welsh local authorities must be adequately funded to enable them to deliver the high quality public services to which they aspire.

3. Regrets that the current local government funding formula is not fit for purpose.

4. Calls on the Welsh Government to commission an external independent review of the funding of local government in Wales to ensure it delivers fair funding for all parts of the country.

Motion moved.

Diolch, acting Llywydd. I'm delighted to move the motion tabled today in the name of my colleague Darren Millar regarding local government funding. I will again declare an interest as an elected member of Conwy County Borough Council as well.

As the start of this motion here points to, and as I've mentioned time and time again in this Chamber, and it's something that I'll continue to raise, throughout the COVID-19 pandemic councils went above and beyond. Many of us know the sacrifice, hard work and dedication that council staff endured and they deserve to be praised for their hard work, right from our social care workers through to our teaching assistants, librarians through to recycling crews, all of whom have gone above and beyond. In light of this, I was pleased to see the Government didn't delete point 1 of our motion here today, thanking councillors, local authorities and their staff across Wales for their role during the pandemic. It's great to see that as a Senedd we can look to agree on this. Nevertheless, acting Llywydd, it's vitally important to recognise that councils had been doing exceptional work well before the pandemic and will continue to do so afterwards. As many people will agree, councils are often best placed to represent the needs of local people, of course.

Devolution was, in fact, introduced to bring powers as close to people as possible, and this is what councils can and should do. But, for councils to maximise their potential, they need suitable funding to be available to do this, and as point 2 of our motion states, councils must adequately be funded to enable them to deliver the high-quality public services to which they aspire. They need adequate funding to allow them to maximise their potential, which, of course, the Government also agrees with today. Frustratingly, and as outlined in point 3 of our motion here, the current local government funding formula simply isn't fit for purpose, though. I will come on to specifically why I think this is in a moment, rather than just making some soundbites.

As Members will be aware, the local government funding formula represents around 70 per cent of a council's ability to spend on and deliver their services, meaning that this funding dictates the bulk of what councils are able to deliver. As outlined in the Government's amendment today, and as I'm sure many Members on Labour's benches here want to highlight, I do appreciate that the proposed local government settlement for the next financial year will rise by 9.4 per cent. Of course, this is welcomed. Nevertheless, it does come after years and years of underfunding and still doesn't address the fact that the current funding formula is out of date and not fit for purpose.

We also know that the Welsh Government revenue funding for local government fell, in real terms, by around 17 per cent through the last decade, and this decade of decline has clearly had a huge impact on local government services in Wales. This consistent underfunding of councils over many years has left many of them in a weak position to deal with the challenges of the present and the future. This is particularly seen with councils in north Wales—the region I represent, which has an older population and rural areas—who seem to be the losers from the funding formula.

I said I'd talk about some specifics. I want to highlight three issues that I believe warrant the call for a review. The first is the quality of the data used to indicate how much money councils should be supported with. There's a thing called the standard spending assessment, which I'm sure we all enjoy a read of from time to time, and this data in the standard spending assessment drives the decision making behind the funding of councils. But, sadly, a number of the data points in here are over 20 years out of date, and I'll highlight a couple of those that feed into this funding for local authorities. The first one here uses data from 2001, and this looks at how many dependent children are in social rented housing. First of all, 20-year-old data looking at how many dependent children are in social rented housing—none of those children are currently children. So, that funding formula there is completely bonkers. The next one, pensioners living alone in households, again uses data from 2001. Pensioners with limiting, long-term illness again uses data from 2001. In a world that is driven by data, with so much available to support decision making, it's completely inappropriate to be using information that is over 20 years out of date. There are the other points in here that are from 1991. I'm not sure if all the Members were born when some of those data points were used.

Secondly, the current financial formula does not properly reflect our ageing population and the support required to ensure our older people can live their best lives. An obvious example of this is that, looking at the funding formula, it assumes that the cost of councils supporting those over the age of 85 is around £1,500 per person, which may seem like an adequate amount. In the next age category, which is those who are age 60 to 84, the formula assumes that it would cost £10.72 to fund and support those people. So, at the age of 85, suddenly it's £1,500 per person, but for a number of years before that, it's just going to cost £10. It's a huge discrepancy, and a misunderstanding of what it takes to best support our ageing population. And, of course, our ageing population is going to become a more and more significant part of who we need to support, and support well, over coming years. By 2038, a quarter of our population will be over the age of 65 and, currently, in areas such as Conwy, 28 per cent of residents there are over the age of 65, compared to Cardiff, which has around 14 cent. So, you can see there are areas where the funding formula doesn't properly reflect the support required to support our older people. Those areas are going to struggle when it comes to funding from Welsh Government at the moment.

So, the first area is around data, which needs a review. The second area is how the support for older people is properly funded. And the third issue that I see is building confidence in the process of this funding. We can see from Welsh Government's amendment 4 today that Government do not want to hold an external independent review of the funding of local government, yet in today's debate, I'm sure that we'll hear from many on the Government benches about how good the funding formula is. But I'd like to ask: if it's so good, and if it's so right, what's wrong with holding an independent review? How about holding an independent review to show it works really well? What are you worried about in terms of having an independent review? Surely if it's that good, let's undertake that review and prove the point that you want to make, that it's all fine.

To conclude, acting Llywydd, councils do an unbelievable job with the funding that they get. If all councils received fair and right funding, they could flourish even more than they do today. Let's support this motion here today, and have an independent review of the funding of councils. Let's unleash the potential that councils have to offer in supporting their local communities. In closing, I look forward to listening to all contributions from all sides of the political spectrum today regarding this really important issue. Diolch yn fawr iawn.

I have selected the amendment to the motion. I call on the Minister for Finance and Local Government to formally move amendment 1, tabled in the name of Lesley Griffiths. 

Amendment 1—Lesley Griffiths

Delete points 3 and 4 and replace with:

Notes the proposed local government settlement increase for 2022-23 of 9.4 per cent announced on 16 December 2021, which will continue to support authorities to deliver high quality services.

Recognises that local government and the Welsh Government continue to jointly review and develop the funding formula so that it continues to be fair, fit for purpose and offers authorities both stability and responsiveness.

Amendment 1 moved.

I move.

I'm very pleased that, at the last Senedd election, we had a large number of councillors who had been council leaders, like Sam Rowlands, deputy leaders and cabinet members elected to the Senedd—people who know first-hand the importance of local government services and the money needed to run them. I will not always agree with them, but I respect their knowledge and experience of local government. I agree we should thank councillors and local authorities and their staff throughout Wales for the role during the coronavirus pandemic. Councillors and councils played a remarkable role. 

Just dealing with one single issue, the issue of homelessness, the Welsh Government provided a £10 million fund that enabled local authorities to engage with all those sleeping rough, and ensure they had access to safe and suitable accommodation to meet the pandemic restrictions. But it was the local authorities and their staff who did the work. Within the first two weeks of lockdown, local authorities accommodated or reaccommodated over 500 households who'd either been sleeping rough or were in accommodation unsuitable for social distancing. This figure eventually rose to over 1,000. 

Local authorities reconfigured teams and redeployed staff to ensure effective provision of services and also found new ways of working with partners. The mechanism of a centralised co-ordination cell within each council brought together partners such as health, registered social landlords, police and probation, third sector organisations and others to collectively plan and deliver services—an example of Welsh local government in action. We had a serious fire in Swansea several years ago, and the local authority were the only people who could take control and ensure it was dealt with, while everybody else, including the fire service, were trying to find reasons why it wasn't really their responsibility, and they shouldn't be having to pay for it. The local authority stepped in and made sure it was dealt with. That's happened in local authorities the length and breadth of Wales, and I'm sure that colleagues here could talk about what was done in their own local authorities. 

The services provided by the 22 local authorities in Wales provide the basic services that people need. The funding formula, or aggregated external finance, which was previously known as the rate support grant before business rates were centralised, is meant to provide resources to financially support local authorities above their local council tax income. The local government finance settlement determines how much of the funding provided for Wales is given to each local authority. This funding contains the revenue support grant and non-domestic rates, and is distributed on the basis of a needs-based formula. I'm one of those people who thinks that the national non-domestic rates should be returned to local authorities. We talk often about devolution; devolution means that some things have to go down from here to local authorities and other places. Devolution should not stop in Cardiff and the Senedd.

Local authorities can raise money themselves locally—not just the council tax, but, depending where you are, things like car parking, fees and charges. But if you look at it, the distribution of properties in each band varies enormously. The number of properties in each council tax band varies. Some, such as Blaenau Gwent, have over half their properties in band A, and very few properties in the top two bands. Monmouthshire, by comparison, has only just over 1 per cent of its properties in band A and 6 per cent of its properties in the top two bands. Monmouthshire, with more high-value properties, has a greater ability to raise money through local taxation. 

Returning to what the Welsh Government funding is meant to be, it means that, if we intend to be fair, councils such as Monmouth should get less per person than councils like Blaenau Gwent from the Welsh Government. What we need is two things: business rates returned to local councils, which would have a huge effect, and a fairer system of council tax with either additional bands or, preferably, council tax based upon the absolute value of the property. You can take a property just over a band, and all of a sudden, people end up paying substantially more. But we also know, don't we, that if you are band A, you pay about half—two thirds, sorry—of band D, whereas if you're in band G or H, you pay about twice as much? So, it isn't based on the value of the properties, as such, and it discriminates against people with lower value properties. 

Council tax is regressive, but it doesn't have to be. It can be based on the absolute value of properties, and we've also got a situation—something we need to think about—namely, how do we make sure that everybody gets exactly the same level of service? Now, it's been said that Blaenau Gwent has much higher band D properties for council tax, and Monmouthshire has much fewer, but that's because of the distribution. If you live in a three-bedroomed semi-detached house in Blaenau Gwent, you're lucky to be in band A. If you live in a three-bedroomed semi-detached house in somewhere like Chepstow, you're probably in band D. So, there's that difference as well. But I think that we need to make sure that council tax is fair, it needs to be changed, and it needs to make sure that every local authority gets what it deserves. 

Firstly, can I declare my interest as a councillor of Monmouthshire County Council, certainly for the time being? And, Mike, can I thank you for your words, but also I'd like to recognise your experience within local government, being a past leader of Swansea. And I thank you for your deep understanding and for speaking up for local government so often as you do, and have done for many years. 

Local authorities are at the heart of our communities, helping families and supporting families, and delivering that vibrant public service we all know, but the pandemic has just further emphasised and underlined just how important they are. And for all they've done and continue to do, we thank them sincerely. But if we value them—we really value them—we need to fund them adequately, but more so, in this debate, fairly. And I know from my own experience as a councillor leader of several years that, for many councils, this hasn't been the case. In part, this is due to the funding formula, and Sam pointed out very clearly some of the shortcomings in it.

Now, the current formula was drawn up—and Mike will know better than me—probably 25 years ago following the move to 22 unitary authorities prior to devolution, and it wasn't a sophisticated process at that time, as we understand. Indeed, there have always been many light-hearted references that it was drawn together on the back of a fag packet to deal with the situation at that time. Clearly, I doubt that was the case, but what we do know is that now it is not fit for purpose. Whilst the formula is calculated on a needs basis and it includes things like population, level of deprivation, the number of school pupils and the length of road networks, plus a lot of 20-year-old other statistics that don't really mean too much any more, I would argue that there isn't enough—or there certainly isn't enough now—recognition of rurality and sparsity, and the unit cost of providing services in a large rural authority compared to that of an urban one. 

For example, the unit cost of running a refuse service or a social care service in Powys has to be an awful lot more than it would be, say, in Torfaen. The anomalies within the formula have led to an inequitable distribution of funding, resulting in a winner-and-loser scenario. To reiterate the point that there is a vast difference between the highest and the lowest funded councils—Mike has already pointed this out and we know the rationale for it—in Monmouthshire, per capita, about £1,176 per person is going to be allocated next time, and it's about £1,881 in Blaenau Gwent. And we know these differences, as Mike has pointed out, are driven by the house banding levels in each authority, requiring councils like Monmouthshire to go and get 40 per cent of its funding from its council tax payers, and probably less than half of that in Blaenau Gwent. In fact, if we were funded, Monmouthshire, at the level of Blaenau Gwent, we'd have £40 million extra. Well, we know that's not going to happen because of that vast difference in banding. But there has to be something wrong with a formula that warrants such a massive change.

Such disparities in funding are also having an impact on the level of reserves held by some councils, where, again, there is a startling gap between winners and losers, with the gaps widening. For example, Conwy was struggling to retain total usuable reserves of around £14 million at the start of 2020, down by over £4 million on the previous year. Contrast this with Caerphilly, with a reserve of £140 million at the start of 2020—a £21 million increase for that same period. Yes, these are different-sized councils, but, clearly, there is something wrong with a formula that sees reserves diminishing in some authorities while increasing significantly in others.

So, acting Llywydd, I must be clear: I'm not arguing here about the quantum. I have seen the amendment, and it is talking about the quantum—'We are giving you more.' Yes, we know that you're giving us more, but this is not about the quantum. It doesn't matter if it was less money. The formula will act in the same way. So, I'm not arguing about the quantum. I'm arguing about how the cake is carved up and shared out.

Now, the stock answer from Ministers—and I suspect that we'll hear it again after—on reviewing the formula, is that they are happy to undertake a review if local leaders ask for it. Now, a quick look across funding levels and reserves in different councils, as well as understanding where the political influence lies—. It's easy to reach the conclusion that it's unlikely that those key leaders would ask for a review. The old adage of turkeys voting for Christmas comes to mind. But the fact is that change is needed. For some rural and north Wales councils, funding pressures, despite the positive settlement this year, are simply becoming unsustainable, and usuable reserves are falling to very low levels because of these pressures.

Acting Llywydd, when discussing council funding, it's also important to look at the role of council tax. The Welsh Government, of course, wants to consult on a review of council tax, as it's seen as regressive and out of date. This is a view generally supported by most of us. But I would argue that, as the funding formula is driven from the council tax base generated from each council, then the two—council tax and the funding formula—

You're out of time now. Can I ask you now to bring it to a close?

Oh, sorry. I've only got a couple of sentences left. 

They are fundamentally, intrinsically, linked. So, local government—it is fundamentally important that it has to have a sustainable future. The Welsh Government urgently needs to commission an independent review of the formula. If it can't or won't agree to this, they should at least open a consultation on the funding formula, in the same way they're reviewing council tax. Thank you.

Just to remember that those people that go over are taking time from the others who want to come in. I want to now call Carolyn Thomas.

Diolch, acting Presiding Officer. I must declare that I am a Flintshire county councillor. As such, I know that local authorities and their staff across Wales have such an important role, working with Welsh Government to deliver front-line services, aspiring for safe, clean and connected communities.

Welsh local authorities must be adequately funded to enable them to deliver the high-quality public services to which they aspire. Having been a county and community councillor for the last 14 years, I have lived through painful years of austerity, a policy introduced by George Osborne of the Tory Government, cutting important public services, including councils' public and health budgets in real terms, while protecting neoliberalism and growing privatisation.

As councillors, we had to deal with year upon year of painful cuts—restructuring, reorganising and downsizing until councils were cut to the bone. Flintshire went down from six depots to one, and I remember Philip Hammond, at that time taking over from George Osborne, saying that we just had to tighten our belts a little further. I remember shouting at the tv, because there was nowhere else to cut.

We had to look at trying to raise income, with difficult decisions such as charging for garden waste collections, increasing car parking charges and asking departments to shave off another 30 per cent, as vacant positions were taken as cost savings. You can see the results now when looking at the state of the highways right across the UK; councils not being able to react quickly to complaints; taking longer with planning applications; blocked gullies and flooding; street lights taking that little bit longer to repair; and now, not being able to recruit for essential roles.

I could also see, as part of that austerity agenda, how the cuts to social security, under the introduction of universal credit, were impacting on people. Councils were trying to step in again and again to help the vulnerable, just as the Welsh Government are doing. As publicly funded advice services were reduced or cut, even charities have to be core funded.

I wanted to say that because that is the starting point that they are at now. And it's often raised that the funding formula for local authorities needs addressing. I did it here in the Chamber just two weeks ago, and I am aware that for the last few years the debate has gone round in circles, with council leaders writing to Welsh Government, Welsh Government then saying that the WLGA need to agree it as a collective, and then they have all different views. As you say, it depends who has the slice of the cake.

Our public services are one of the biggest employers in Wales, and in Flintshire, despite the reduction in workforce, the council still employs 5,500 people. That's local people—teachers, social care workers, cleaners, teaching assistants, waste operatives. And in many areas, such as Anglesey, the council is the biggest employer. They not only provide important services; they also employ local people that then spend their money in the local economy and send their children to local schools.

This year was a good settlement for councils in Wales from Welsh Government, at an average of 9.4 per cent compared to English councils' settlement of 6.9 per cent, but the variance per capita and per council can be hugely significant, with the gap between the highest and lowest paid council widening year upon year. And we heard this evidence at the Local Government and Housing Committee. The accumulative impact can mean the baseline, for some, remains low. The difference between neighbouring authorities can be £650 per resident and £50 million or more per annum. So, for example, a £20 million highways maintenance grant through the formula can equate to £1.2 million for one authority, and £850,000 for another. And if this is the same, year upon year, one continues to do well while the other struggles. It does make a huge difference.

I think now is the time to review it. As I am aware, some councils have large reserves and are able to set low council tax, and have retained resources and expertise to draw down grant funding, such as active travel funding. You know, you've got technical officers—some authorities don't have them any more. And it's really hard to buy in those services. You can buy them in, but they haven't got the local knowledge either to deal with local issues, so it's a real problem. And this does impact in my area of north Wales, where councils are struggling as a whole. 

Two weeks ago, when I raised addressing the funding formula in the Chamber, I asked the Minister if the distribution committee that sits below the finance committee could investigate the funding formula or look at having a funding floor. I just think that would really help as well, because we've got to that baseline now for some authorities that are struggling so much. And the Minister responded to say that she would take this to be looked at by the finance committee, which I was satisfied with. So, there's the finance committee with a distribution committee that sits underneath it, and—. I'm happy with that, and I believe there are some leaders that sit on that as well. 

I've also asked for a paper to come to the Local Government and Housing Committee. I believe it needs to be looked at and analysed to see if it's still fit for purpose. If it's found to be fair and up to date, according to the formula, that's fine, but I just think it needs to be reviewed. Diolch.

I'd like to declare an interest, as a current serving member of Denbighshire County Council for the fantastic Prestatyn South West ward. So, you speak to any council in north Wales, even Labour-run Flintshire County Council, which Carolyn Thomas is a member of, and they will tell you the same thing—that they get short-changed by Cardiff Bay. Historically, we in the north have lost out because the funding formula prioritises the south Wales Valleys.

While it's very welcome that Denbighshire is to get one of the biggest increases this year, it does nothing to address the historic underfunding and gives no certainties for future years. This is an annual lottery and it has to end, and it's high time we had a funding formula that was fair to every part of Wales. Sadly, my constituency is home to two of the poorest areas in the country, and has one of the highest percentages of retirees. Around a quarter of the population of Denbighshire is over the age of 65, yet the current funding formula does not reflect the additional need for services to cater to this ageing population. Councils get an extra £1,500 for every person over the age of 85, but a pittance for anyone between the ages of 65 and 84. How are councils supposed to provide adequate social care when they continue to be short-changed? For places like Denbighshire, the outlook is not great.

Demographic changes over the coming decades will place a further strain on already struggling finances. Key services have been cut to the bone or axed altogether in recent years due to poor settlements from the Welsh Government, forcing councils to put up council tax— council tax bills that the public can't afford. The pandemic has exacerbated the situation, with inflation rocketing around the globe, pushing up food and fuel prices, putting an extra strain on household budgets. Yet my constituents will once again be asked to foot the shortfall in local government funding. Council tax bills will soar once again this year as hard-pressed councils seek to address huge gaps in their funding, struggling to keep services running, and this shortsighted approach by the Welsh Government can and will have devastating consequences. We are already seeing the strain a lack of social care is placing on our NHS. How many people will die because our local authorities can't afford to provide sufficient care packages? And that's the reality of this situation. The societal cost of poor local government funding—

Will you take an intervention?

Yes, indeed.

They've got to provide care; it's a statutory requirement. If they don't do that, they're breaking the law—the Gloucester judgment, as Sam will tell you.

Thanks for the intervention there, Mike. So, how many people are now experiencing loneliness and isolation because the day centre is closed, or because the local library has just shut up shop? What will happen to those communities whose community centres have closed and how will digital inclusion suffer as more and more services are forced online because of the cost-saving measures? Our councils provide the majority of services that the public rely on, yet they are faced with the tough choices to cut back or pass the funding burden on to a public already paying too much. We need fairer funding for local government, funding that is fair to taxpayers but at the same time allows for high-quality public services, and I urge you to support our motion tonight. Thank you.

May I thank everyone who's contributed to the debate so far? I think it's a valuable debate, and I'm sure Mike must feel it's Christmas come early. He has a debate on PR and the funding of local government; you’d only need a debate on Swansea City AFC, and you'd be living the dream. [Laughter.]

But, on a more serious note, I want to echo the thanks that we've all paid to council workers and councillors for going the extra mile over recent years, and they will continue to do so, of course, as we try and restore services.

The Welsh Government, of course, is looking at how council funding is collected by looking at council tax, so I do think that it's just as valid for us to be asking how that money is distributed too. Year on year, concerns are expressed, some lose out, some feel that they are underfunded, and you look at the global figures in the funding league, but the per capita figure, of course, tells another story altogether in terms of how striking some of those differences are.

But I am pragmatic enough and practical enough to understand that any formula would produce winners and losers. No formula would please everybody. But I also understand the argument that it doesn't matter how you cut the cake, the cake isn't large enough and it never will be, in all likelihood. But what we need to do is to ensure that it’s cut as fairly as possible, whatever its size, and that's the point of this debate. There is a strong feeling among the council leaders and councillors I've spoken to that the formula is dated and we do need to look at it again. Perhaps people could argue that the formula is good, but that's not to say that it can't be better.

And it's not just looking at the formula in isolation either; we need to look at the bigger picture of council funding, because a point that's raised with me by councillors is that there are new responsibilities conferred on councils that are supposed to be cost neutral, but aren't really cost neutral. There are additional costs falling on our councils, and those should be taken into account.

And what of the Luke Sibieta report on school funding, commissioned by the Government in 2020? That shows substantial differences in expenditure per learner across schools in Wales, and that partly reflects the different funding formulas used. Those formulas can be very complex, including a number of different factors, creating complexity. And the suggestion in the report there is that you need more consistency across different areas, something that would also enhance transparency and reduce funding disparities across schools.

So, it would be timely, I think, to look more broadly at these issues, and, as we heard at the beginning of this debate, to use more contemporary data. We're about to see the latest census data. Why not consider coming to a point where there is a review every 10 years, let's say? That, every time we have new census data, there should be a process of review so that we can be confident that it's not dated and that it is still fit for purpose. 

There's also a debate to be had on the role of a funding floor. I know that can be contentious, but that would be the opportunity to have a real debate about that. And one could argue that that would need to be put in place whilst the review is being conducted in order to reduce the burden on some of the councils that don't receive as much as they were perhaps hoping.

In terms of the Government's amendment, well, everyone does recognise that the increase of 9.4 per cent in the settlement is better than expected, but the point that it's not the size of the cake, but how that cake is shared, is today's debate. And whilst we also know that it looks good for year 1 in the funding cycle, years 2 and 3 are going to be exceptionally challenging. And when the purse strings are pulled tight, then that's when the most fierce debate on the formula will take pace. So, we need to get ahead of that and seek to ensure that what we have is fit for purpose.

So, to conclude, the Conservatives are right—and, again, I don't say that too often. But this is a funding formula that is dated. It is not fit for purpose. It was created in an ad-hoc manner decades ago with no intention that it should last this long. We could also say that about the Barnett formula too, and I'm sure that will be the debate you bring forward next week.

It's very noisy over there. I now call on the final speaker, Janet Finch-Saunders.

Diolch, acting Llywydd. Between 2010-11 and 2019-20, Welsh Government revenue funding to local government fell by a shocking 17 per cent. Additionally, the Office for National Statistics has reported that between March 2010 and 2020 there was a 19 per cent decrease in staff for local government in Wales. These stark and shocking figures give us just a snapshot of the lack of support that our local authorities were receiving before the pandemic. They have been at the forefront of the COVID-19 response and shouldered a significant burden throughout the pandemic. Staff have been seconded to different departments and they helped to establish support networks and even, indeed, deliver food to vulnerable residents. This certainly stretched their already depleted resources and services past breaking point.

In freedom of information responses I've received from local authorities, I've actually been quite shocked to see, between 2018-19 and 2020-21, there's been around a £10 million or an 118 per cent increase in the spend on housing individuals in temporary accommodation. And speak to any local authority leader or cabinet member and they'll tell you that the homelessness budget is a real severe strain now, and it's something that is not dissipating. This increase is, without doubt, actually, if you look at this in a strategic way, partly down to the Welsh Government's continued failure to deliver on the number of new build houses our communities require. And it has been made clear to me by at least one member that the spend has rocketed even higher this financial year.

Sadly, this is not the only example of where councils have been left holding the can for Welsh Government's failings, forcing local authorities to make up budgetary shortfalls through other means. In October of last year, the BBC reported that Cardiff city council was due to see its public debt skyrocket by roughly 70 per cent, with the forecast of the council borrowing over £1.4 billion by 2023-24. This situation has made it clear that this Welsh Government is hiding away from taking all the necessary steps to fund and support local authorities. Rather, they are shifting this burden onto local authorities, forcing local councillors to cut vital public services, which detrimentally impacts our most vulnerable citizens, increasing council taxes, stifling local economic growth and adding additional financial pressure to residents who are already struggling to cope with the cost-of-living crisis in Wales. It is those regulatory departments who have seen depletions in their staff; our planning authorities now having backlogs of several planning applications. Llywydd—acting Llywydd—they should not have to be so overstretched. As announced in the recent UK budget, the UK Conservative Government has committed to increasing the Welsh Government budget by an additional £2.5 billion per year for the next three years on top of the annual baseline funding of £15.9 billion per year, yet, the Welsh Government, you do continually cry wolf all the time about lack of resources.

As has been said here today, the current funding formula is not fit for purpose. And I was shadow Minister for local government for seven years here, and in 2010 we were having the same arguments. And the Minister at that time, pointing a finger at me, was saying, 'But the leaders, that's what the leaders want.' Well, I'm telling you now, it definitely needs to be looked at, because standing up tonight and asking these very same questions, it's rather like déjà vu; you really do need to get a grip now and have a look at that funding formula. I once had a meeting with civil servants here, or Government officials here, and they said, 'Janet, we can tweak it, but it would be just impossible to review the funding formula.' But it doesn't sit right now, especially when you look at my own constituency of Aberconwy. I have people moving out of county into other areas where they've no family or friends network, because there are no social care packages available in Conwy. That's not the authority's fault; it is lack of funding.

It cannot be right that you are allowing some local authorities to hoard taxpayers' money, whilst my own Conwy County Borough Council is having to increase council tax by 3.9 per cent. Peter Fox admirably mentioned about the hundreds of thousands that some local authorities—predominantly Labour authorities—in south Wales, how they're allowed to hold on, year on year on year, to £120,000, £130,000, and £1.3 million in some instances. It cannot be right when Conwy's figure is—

Can you bring it to a conclusion?

Gosh, I will indeed [Laughter.] I will. Diolch, acting Llywydd. All I would say: come on, we've got a third of new Members in this Senedd now, we've got new talent, who've had experience on local authorities. If you wouldn't listen to me, listen to them. Thank you.

I call on the Minister for Finance and Local Government, Rebecca Evans. 

Diolch. I welcome the first part of the motion. We all, of course, want to thank local government staff and elected members for the work that they've done over the last two years. And they've been exceptional times and local government's response has truly been exceptional. I look forward to continuing the really strong working relationships that we've developed during what's undoubtedly been the most challenging time for local government in living memory. The challenges facing local government, though, are not over and we must now collectively face up to further challenges, including the cost-of-living crisis and the climate emergency, and I know that our local authorities are determined to meet those challenges.

I also welcome the second part of the motion. Local authorities funded to provide good public services for everyone and that support those who need it are at the heart of our plan for a stronger, greener and fairer Wales. So far, through the pandemic, we've supported local authorities with over £860 million through the hardship fund in recognition of additional costs, loss of income and the support schemes that they're administering for us, and councils have delivered to small businesses, to individuals and to communities. And as we've heard, I was pleased to announce, on 16 December, a 9.4 per cent increase in local government core funding for 2022-23 over the current financial year. And this means that an additional £437 million is being provided to continue to support local government to deliver the high-quality services that the people of Wales deserve.

I had hoped to keep my response and my comments in this debate positive and helpful, but, my goodness, I have to object to the Conservatives bemoaning what they're trying to characterise as a decade of underfunding on behalf of the Welsh Labour Government, because, of course, we are talking about a decade of austerity imposed by the UK Government. And I respectfully suggest that it's the Conservatives in this place who need to get a grip and it's high time that they started to take some responsibility for the impacts of the choices of their party in Westminster.

But I will move on to say that the core funding that we provide to local government is distributed through a well-established formula, created and developed in collaboration with local government and agreed annually with local government through the finance sub-group of the partnership council for Wales. And this formula is free of political agenda and it's driven by data, and the settlement is distributed on a formula using over 70 indicators of need to spend. It does have collective buy-in from local government and is rightly based on the key principles of equalising for relative need to spend and relative ability to raise income locally. The formula's constructed and governed in—[Interruption.] Of course.

Can I make a brief intervention here? Thank you. You pointed out there that the formula is driven by data. Would you accept, though, as I pointed out, that some of the data points—actually, quite a few of the data points—are clearly very far out of date? And, actually, a piece of work needs to be done, at the very least, to make sure that the data you're using, and Government is using, to fund councils is accurate and as up to date as possible.

And I'm just about to come on to exactly that point. The formula is constructed and governed in such a way that it can't be manipulated unfairly by any one authority or group of authorities, or by politicians, whether they're locally elected councillors or Welsh Government Ministers. And, of course, there have always been calls for a fundamental review of the formula, and some have been made to me as recently as last week. But these calls have been isolated and they're not united, and we've always recognised the risks and challenges that such a review would pose. But that, of course, isn't to say that the formula is fixed.

Would you take a further intervention, Minister?

Of course.

Would you agree with me—? You will see from the Finance Committee's evidence that the Welsh Local Government Association are saying that many local authorities' reserves are shrinking, at a time, though, when the actual reserves in the WLGA, in the local government family's pot, have increased by £0.5 billion during the pandemic. How can it be justified that a formula can allow those huge differences to continue? Because that will allow some authorities to fall off a cliff edge, if it's allowed to continue. This isn't about the quantum; this is about the distribution.

And I think that you would agree with me that, when we do publish our annual report of local government reserves, it is just a snapshot in time, and that many councils do have plans, and they have earmarked money within reserves for plans. So, it does only reflect a snapshot at that point in time. And, of course, we have seen a couple of extraordinary years, so local government reserves I don't think this year are necessarily going to be reflective of what you would see in normal years. I know we'll go on to discuss reserves, but I do want to continue to talk about the formula and say that it isn't fixed.

It is under constant review, through the work of the distribution sub-group, overseen by the finance sub-group. I did discuss the formula's suitability in distributing funding to local government with local government leaders just last week, at the finance sub-group, and we did, at that meeting, consider the impact of changes to welfare benefits and we talked about the census and the timeliness of some data within the formula.

So, as agreed with local government leaders, the DSG is about to embark upon a programme of work to consider potential updates to the formula, using outputs from the latest census, which will provide us with much more up-to-date and relevant information. And I think that this is really important, and it's also one of the reasons why I was only able to provide Wales-level settlement allocations for years 2 and 3 of the multi-year settlement, and that was to ensure that we are using the most accurate and up-to-date data.

Interestingly, the majority of data in the formula, relating to 72 per cent of the funding, is actually updated annually. In recent years, the DSG has recommended changes to the treatment of a number of data sets, as a result of the reforms to the welfare system and also the impact of the pandemic. And then, that separate issue that was raised this afternoon, which was also raised in the Local Government and Housing Committee with me last month, relating to the weightings applied to different age cohorts within the formula, I just want to confirm that officials will be discussing this particular issue with the distribution sub-group at their next meeting on 22 March.

As colleagues have recognised, we have committed to making council tax fairer in Wales and, as part of this work, we will need to consider how the funding formula needs to respond to this, and other change of circumstances, whilst also continuing to provide authorities with stability and certainty. Of course, as we've heard, any change to the formula inevitably results in winners and losers, and these could be substantial. And that's why we've said previously that, if there is a collective appetite from local government to carry out a fundamental review of the local government settlement funding formula, we will act on it, and we'll do that together.

But while there are always improvements to be planned and made, I can't agree that the current formula is unfit for purpose. It does provides transparency and stability, while responding to changing needs and circumstances, and our continuing support for local government, demonstrated throughout the pandemic and with the latest three-year funding proposals, enables local authorities to deliver high-class local services right across Wales. Diolch.

I call on Laura Anne Jones to reply to the debate.

Diolch, acting Presiding Officer. I'd like to firstly declare that I'm still a councillor in Monmouthshire County Council. May I start by thanking Darren Millar and the Welsh Conservatives for bringing forward this debate today? And thank you, Minister, and I thank everybody for their contributions this afternoon.

Acting Presiding Officer, having sat in many Senedds and Assemblies like myself, you will know too that what we've heard today is nothing new. We have heard pleas over and over from Members across Wales, time and time again, as Carolyn Thomas and Janet Finch-Saunders have said, and as Sam Rowlands said, that that formula is inherently out of date and fundamentally unfair. Yet nothing has changed.

It is a shame, and it's a particular shame as we have a sixth Senedd that supposedly prides itself on fairness, social justice and equality, a Senedd that proclaims it wants to look after every person in need in Wales. Yet we have a Welsh Labour Government determined not to change a formula that determines local government funding that means that some most in need will be disadvantaged.

There is a massive difference between doing the right thing and doing the right thing for your party. It is disappointing to witness the look-after-your-own attitudes that we have seen in this Chamber today. Minister, Labour's standpoint is clearly a politically motivated decision to keep a formula that means that some of the struggling low-income families in Wales out there could be potentially left without the services or support that they need, or have to deal with council tax rises because they happen to live in a rural area, where they work, that is deemed affluent.

It is lucky, as Peter Fox has highlighted, that we have councils in these hard-hit areas, like in his own constituency of Monmouthshire County Council, who are consistently at the bottom of the table when these funds are distributed, that are so good at managing money and so innovative in coming up with schemes for their residents that mean that much needed support for their most vulnerable and the less-well-off doesn't have to suffer because of the extraordinarily unfair deal that they receive from this Welsh Government.

It is not right, as Janet Finch-Saunders and Gareth have both said, that councils in rural areas in north Wales, those that have significant ageing populations or with severe pockets of deprivation in rural areas, have to consider raising council tax as the only way to save their vital services for their residents. It is not right, as Janet Finch-Saunders said, that we are putting our most vulnerable at risk.

As Sam Rowlands, Mike Hedges and Llyr Gruffydd say, many of our councils have been exemplary. The way that our councils have reacted to the pandemic just shows how valuable they are, and I extend my thanks to them also. It was impressive to see how councils were able to reorganise, adapt to where their constituents most needed them; how they became a blanket for the most vulnerable in this national crisis; how councils react to flooding. Whatever is thrown at them, as Mike Hedges said, they are always on the front line, delivering to our constituents. We need our councils, all councils, across the whole of Wales, regardless of which party runs them. They play a vital role in delivering our Senedd's and your Government's aims.

As Peter Fox says, if we continue to underfund them, whilst continually putting more pressure on them, then we may even see some councils fall. This comes from someone who has been a council leader for 13 years, who has seen first-hand how a slight percentage change in the funding formula affects the day-to-day running of a council and how it delivers its vital services, and the difficult position that constantly underfunding a council can put it in.

The unfairness, as Gareth Davies says, cannot continue. We have a formula that uses out-of-date data, as Sam Rowlands has pointed out time and time again in this debate. As Llyr Gruffydd said, there are winners and losers in any formula, but we need to find a formula that is fair, the fairest possible formula that we can have. He also raises important things that we need to take into account in any review of using census data or a funding floor.

For two decades now, since the formula was established, rurality has been overlooked. As the Welsh Conservatives and Plaid Members have said today in this debate, rurality needs to be factored in. Its vast areas demand more money. Put very simply, Minister, like Peter Fox said, the cost of collecting rubbish from 100 terraced houses compared to 100 spaced-out farms is going to be hugely different in terms of time and fuel costs. The Welsh Government's funding formula for local government doesn't take this into account; it is fundamentally flawed and fails to recognise the challenges of delivering services in rural areas.

Rural councils simply cannot deliver some of the efficiencies that can be driven in small, geographical areas in the way that cities and Valleys councils can. Newport now has one household waste and recycling centre; English-medium post-16 education in Torfaen is delivered from a single campus, the Torfaen learning zone. That's brilliant, but these are two examples of efficiencies that cannot be achieved in a sparsely populated rural area where you need smaller, accessible schools and services within reasonable travel distances.

We have an ageing population. As Gareth said, we are on the brink of facing a crisis in our councils due to the enormous extra pressures that an ageing population brings, particularly in our health and social care budgets in councils. As Sam Rowlands said, it is a problem and a financial pressure that is only going to get worse.

We've heard from the Minister today about how councils like Monmouthshire have had the best settlement yet. Although in part this is true and very welcome, as we've said, it is not entirely true, is it? If this Welsh Government were to continue giving money in that fashion year on year in the same way, it would certainly be something to celebrate, but it's not, is it? It is a good amount, Minister, in this first headline-grabbing 'there's an election coming' year, but what about the years to follow? It's funding, particularly post pandemic, that will be going down. Funding, particularly post pandemic, and particularly when we're facing a cost-of-living crisis, needs to go up year on year to at least fall in line with rises in inflation. That's the reality. So, there is a bit of smoke and mirrors going on here today, if you're honest, Minister.

As Sam Rowlands and all our Conservative Members have said here today, we welcome the money, but it's not the answer and it's certainly not all you claim it to be. As Peter said, his constituency of Monmouthshire is the lowest funded council in Wales, receiving just £1,176 per head of population, yet some neighbouring urban councils receive as much as £1,881 per head. Even the second and third lowest councils, the Vale of Glamorgan and Flintshire—£1,372 and £1,476 respectively—receive significantly more than Monmouthshire. As my colleague Peter says, if Monmouthshire was funded at the Welsh average, the council would receive an extra £40 million every year to put into front-line services. The gap between the best and worst councils in Wales has simply got too wide, and it does impact on the running of the council and the success of bids, as Carolyn Thomas says. Even this year, with Monmouthshire receiving the largest percentage increase of 11.2 per cent, following years of underfunding, the gap between Monmouthshire and other councils continues to widen. This is completely unsustainable and speaks volumes about the attitudes of this Welsh Government towards rural Wales.

Cross-party leaders in the WLGA have all relayed their major concerns on the unfair formula, with the obvious exception of some, as it's like turkeys voting for Christmas. We urgently need an independent external review of funding for local government to ensure that it delivers fair funding for all parts of Wales. [Interruption.] Monmouthshire as well, yes. After two decades of a funding formula for local government that has punished north Wales—as Janet, Gareth, Sam and Carolyn has said—has punished rural areas, doesn't take into account an ageing population or pockets of deprivation in rural areas, it is now time, time to have a Senedd that's true to its word of making Wales an equal Wales, to have a Government that will establish an independent review, or something in line with what you're doing with council tax, and seek to change the unfair, out-of-date funding formula and the way that local government is funded for good.

Thank you, again, everybody, for your contributions and to Plaid Cymru for your support. I hope that Members across this Chamber today will vote for our motion and do what is right for all of Wales, not just for your party.

The Llywydd took the Chair.

The proposal is to agree the motion without amendment. Does any Member object? [Objection.] Yes, there is an objection, so we will defer voting on the motion until voting time.

Voting deferred until voting time.

We now reach voting time. We'll take a short break for preparations for the vote. A short break.

Plenary was suspended at 17:45.

The Senedd reconvened at 17:49, with the Llywydd in the Chair.