Thank you very much for the opportunity to contribute to this debate. Saying that it is a very difficult and challenging situation for local authorities is a serious understatement, I would think, and the Minister referred earlier to the current 12-month settlement—9.4 per cent. Twelve months ago, it was announced by the Minister, much better at the time than anyone had imagined, to be fair, but, of course, there was a recognition at that time that years 2 and 3 would be challenging. Of course, in the meantime, we've seen what's happened to inflation and it has shown that settlement in a very different light by now. And yet again, this year, 7.9 per cent, many would say is better than expected, but we are in a very, very, very different context. There is a background of 12 years of cuts, meaning that there is no slack left for local authorities to make cuts—nothing left other than to make cuts to the bone—and nobody would underappreciate the very difficult decisions that local authorities have to make across the country.

The Welsh Government evidently is framing this as a positive settlement and in the context that we find ourselves in, there's something in that, perhaps, but the reality of the situation tells a possibly more challenging story, because the funding gap does mean that not only are we going to see an increase in taxes, as has been referred to, at very significant levels, but, at the same time, we're going to see extreme levels of cuts in certain situations. So, it doesn't look like a very prosperous situation. And this is coming at a time when people are less able to pay a council tax that will have increased significantly, but also when those services that will be cut will be needed more than ever.

The settlement of every local authority is lower than inflation, so I think that tells its own story, and every indication from the UK Government does suggest that austerity 2.0 will continue, and might intensify, and so the situation could be exacerbated before it gets better. And there is great pressure from several directions on local authority budgets. We know about social care in the context of children and adults, which is a great burden. There is a duty, in that sense, on the Senedd to help local authorities as much as we can, not only financially, but in terms of tackling some of the systemic problems that exist in the relationship, particularly between social care and health. And, of course, there is work happening in that context, and it's important that that work does progress urgently.

There is pressure on housing and homelessness budgets, with waiting lists increasing. I've heard, for example, that the Wrexham waiting lists have doubled to 4,000 just in the last two years, but, of course, the resources available to the local authorities aren't close to being adequate to respond to that challenge. And the blow that the Welsh Government is receiving in terms of capital budgets is evidently going to have an impact on the capital budgets available to local authorities. That's going to place more pressure on them to borrow, and we know what's happening to interest rates. The Public Works Loan Board is 4.2 per cent now, I think, for a one-year loan, whereas two years ago it was just 1 per cent. So, these challenges that local authorities are facing are coming from every direction that you can imagine.

So, the important message from me, in looking at the broader settlement, is flexibility. I do feel that we do need to ensure that local authorities have the greatest flexibility possible to respond. In a period of austerity, local authorities know how best to make the best use of the scarce resources that they have. So, empowering local authorities instead of being too restrictive in terms of how those scarce resources can be used.