Senedd rejects calls to press ahead with “long overdue” council tax reforms

The Senedd rejected calls to press ahead with “long overdue” reforms to council tax before the next election despite an “overwhelming” moral case for change.

Peredur Owen Griffiths, Plaid Cymru’s shadow local government secretary, warned council tax imposes a disproportionate burden on poorer households.

He tabled an amendment to the local government finance bill, which would have placed a duty on the Welsh Government to stick to implementing reforms by April 2025.

In mid-May, the Welsh Government pushed back plans – which were jointly agreed with Plaid Cymru – to redesign council tax with the aim of making it fairer until 2028.

Plaid Cymru pulled out of the broad cooperation agreement two days later due to the delay coupled with concerns about donations to Vaughan Gething’s leadership race warchest.

‘Grasp the nettle’

During a debate on July 9, Mr Owen Griffiths urged fellow Senedd members to back his amendment to ease pressure on some of the poorest households in Wales.

He said: “Reflect on the real-world implications of kicking this reform into the long grass, especially for lower income families who are continuing to struggle to make ends meet.”

He warned the delay would condemn those with the least to three years of disproportionately high council tax bills while those with the broadest shoulders do not pay their fair share.

Mr Owen Griffiths told the Senedd: “The moral case for implementing this change is overwhelming and, given the continued financial pressure facing households across the length and breadth of our nation, now is the time to strike whilst the iron’s hot.”

The South Wales East MS accused the Welsh Government of letting an opportunity slip, with parliamentary arithmetic currently in favour and a Senedd election on the horizon in 2026.

‘Unworkable’

Rebecca Evans, for the Welsh Government, described the Plaid Cymru amendment as “too broad to constitute workable or clear law”.

The finance secretary reiterated that a consultation found a clear appetite for a council tax shake-up but over a slower time frame.

Ms Evans said it is no longer feasible to deliver reforms by 2025, adding: “We’re listening to the people of Wales by moving forwards with council tax revaluation and reform in 2028.”

She stressed ministers remain committed to reforming council tax, with the first revaluation of Wales’ 1.5 million homes since 2003 scheduled for 2028 and every five years following.

She told the chamber the local government finance bill will underpin delivery of the proposals developed with Plaid Cymru’s Cefin Campbell as part of the cooperation agreement.

Members voted 12-37 against the amendment.

‘Reckless’

Peter Fox put forward amendments that would give people a say on “reckless” council tax rises, with a local referendum required for any increase in excess of 5%.

The Conservatives’ shadow local government secretary, who led Monmouthshire Council for more than a decade, said: “Councils can’t keep hiking council tax excessively year on year.

“I put council tax up, I admit it, every year. We had to do that. But there is a limit to how long the public can keep putting their hands in their pockets. Sometimes they need to have a say in if this is right or not, and the councils have to go back to the drawing boards.”

Ms Evans said no council that has held a referendum has been able to proceed with its initial budget needs since the policy was introduced in England in 2012.

She said setting limits in this way effectively becomes a target for local authorities to raise council tax to the maximum allowed rather than carefully considering what is necessary.

Mr Fox’s amendment fell, with 36 against, one abstention and 12 in favour. As did another Tory amendment seeking to enshrine the 25% single person discount within the bill.

Business rates

If passed, the bill would increase the frequency of business rates revaluations to three years.

Mr Fox also spoke to a Conservative amendment to use new powers in the bill to create a separate business rates multiplier for small businesses.

He said: ”It is important that the differences between small businesses and medium and large businesses are recognised in the rates that they pay.”

The Tory MS for Monmouth added: “We should be really thinking about looking at creating a multiplier for small businesses, as Scotland and England have.”

Plaid Cymru supported the amendment, with Mr Owen Griffiths saying seeking and obtaining powers but not using them has been a recurring trend with the Welsh Government.

Ms Evans said the Welsh Government has no current policy intention to create a small business multiplier, committing to consulting before introducing any such differential.

The amendment was narrowly defeated, with 25 against and 24 in favour.

‘Excessive’

Following the meeting, Mr Fox warned: “Be in no doubt, Labour has today passed a bill that will result in continued excessive council tax rises for the people of Wales.”

But Ms Evans told the Senedd the bill will deliver meaningful change to council tax and business rates in the short term as well as pave the way for further reforms.

“It’s an opportunity to make a real difference to a taxation system that impacts almost every person and business in the country,” said the finance minister.

The bill now moves onto the fourth and final stage of the Senedd’s legislative process, with a vote of the whole Senedd on the amended version scheduled for July 16.

With Labour and Plaid Cymru’s support, and no legal challenge expected, the bill is likely to be agreed next week before moving on to receive royal assent.

By Chris Haines, ICNN Senedd reporter