3. What impact does the Cabinet Secretary expect the Local Government Finance (Wales) Bill will have on council tax payers? OQ60929

The Bill seeks to improve the overall design of the council tax system to include regular revaluations, and to ensure the legal framework for discounts and reductions remains fit for purpose. A detailed impact assessment has been published alongside the Bill.

It's recognised that the review of council tax is long overdue and necessary, and many people who have written to me have recognised that, but a few constituents have written to raise concerns as well. One concern I've had raised is the unintended consequence these reforms could have on those living in properties that have increased significantly in value due to house price inflation but the people living in them are on fixed incomes such as pensions—in other words, those who are asset rich but cash poor, and could even be living in Fuel Poverty due to increases in energy prices over the last two years. Specifically, those issues have been raised. A constituent has also made a suggestion that council tax reform could include an upper limit on the percentage of household income that is paid in council tax, whatever band that home might be in. The constituent who has written to me would like to know whether you would consider that as part of your consideration of consultation responses, and also in any bid that you do make in the future to make council tax fairer. 

I'm grateful for the question and also for the interest that Members of the Senedd and members of the public are showing in the issue of council tax reform. It does affect every household across Wales, so it's right that every household should take an interest and share their views with us. I think one important thing to stress is that just because a property has increased in value over the last 20 years, it doesn't mean that it would necessarily see an increase in their Bills. What matters is where your property is in relation to all other domestic properties in Wales and whether or not that has changed. So, that's important to recognise, as well as the fact that the aim of the exercise isn't to raise more money overall; it's to raise the same amount of money, but to do so in a way that is fairer. So, that's important to recognise.

It's always good when people come forward with different ideas of how we might look at things. Certainly, the potential way forward that has been described reminds me of the work that we did when we looked at a local income tax, to see if that's something that could replace council tax, going forward. In the end, we did discount that particular idea, because local authorities don't have access, routinely, to household income information for every household. That could be particularly difficult, then, to access. People's household incomes change all of the time, and one of the benefits of council tax, as it stands at the moment, is that it's a relatively simple tax in many ways. But property is only half of your council tax; the other half, of course, is the occupants of the property.

There are lots of mitigations that are already built in to the council tax system that do take account of people's ability to pay, such as the council tax reduction scheme, which supports more than 220,000 households across Wales, and the single-person discount, which benefits around 500,000 households in Wales. Together, these kinds of measures mean that nearly half of households in Wales don't pay the maximum council tax bill. So, it's really important, as we move forward, that those mitigations are also looked at alongside the work that we do on council tax reform, insofar as the property side is concerned, to ensure that we provide support to those people who need it most.

Minister, we in the Welsh Conservatives support the general principles of this Bill. However, current proposals will see revaluations of non-domestic rates occur more frequently than revaluations of council tax, therefore placing additional pressures on businesses. The Welsh Government have made it clear that their research indicates that the current system of council tax is outdated, so why are you putting off reforming it? It's clear that we need reform in the current system, and for councils to be forced to hold a local referendum, perhaps, when they increase the council tax beyond that cap of 5 per cent, similar to what's been practised in England, of course, since 2012-13. So, Minister, is this something that you'll be considering?

Thank you for the question. In relation to non-domestic rates and council tax, the intention is for revaluations on the non-most domestic rates side to be every three years, and then five years on the council tax side. There's no real reason why they should be on the same cycle, because they are different taxes, in that sense. I think that the three-year cycle actually responds to what businesses were telling us that they wanted. They wanted frequent revaluations to better reflect the economy locally and the value of that property, but then also to have a degree of stability as well. The three-year cycle has been welcomed by representatives of the business community for the non-domestic rates.

It's not our intention to introduce local referenda for council tax. We do think that the level of council tax should be set by local councils. It is very much a part of local democracy in the way in which people can make their views known to the council. But that said, council tax is only part of the funding that local Government receives. We would want to be in a position to give local government always the best possible settlement, and that does require, I'm afraid, further funding in relation to public services from the UK Government.