Senate considers amendments to Local Government Funding (Wales) Bill

Tuesday July 9th, The Senedd will have its second opportunity to amend the Local Government Finance (Wales) Bill.

The Bill imposes a duty on Welsh Ministers to undertake five-yearly council tax reviews and increases the frequency of non-residential tax (business tax) reviews. It also removes the requirement for local authorities to publish council tax notices in newspapers, which has sparked a strong reaction from certain media providers in Wales.

The Local Government and Housing Committee examined 45 amendments tabled to the bill on June 13, 2024. Of these, only 8 were accepted, which were all Welsh Government amendments.

This article summarizes some key discussions when considering the second stage.

Reassessment of the housing tax by 2028

The Welsh Government Phase 1 of consultation – A fairer housing tax proposed to undertake a revaluation of all domestic properties on 1 April 2025 using existing powers. These powers were last used by Welsh ministers to revalue properties in 2005There is currently no legal obligation to regularly update property valuations.

THE The bill as presented would have established statutory revaluations of the housing tax from 2030, and every five years thereafter (in 2035, 2040, 2045, etc.). However, a Phase 2 of consultation on local tax reforms, undertaken between November 2023 and February 2024, highlighted a Public opinion divided on speed of reforms.

On May 15The Secretary of State for Finance, the Constitution and the Cabinet Office, Rebecca Evans MS, told members that despite “a clear appetite for reform”, it would now be implemented in a “slower timescale”. As a result, the 2025 revaluation was abandoned.

THE Cabinet Secretary presented amendments to the bill to allow statutory council tax revaluation cycles to commence in 2028. Luke Fletcher MS had lodged a amendment which aimed to force Welsh ministers to implement reforms by 1 April 2025, and spoke of his disappointment that the revaluation of domestic properties would not go ahead as planned. He noted that it was an opportunity to do something “quite revolutionary”, but also acknowledged that the time to act on reforms in 2025 was now “past” and withdrew the amendment.

Referendums on increases in housing tax

Seeking to add new provisions to the bill, Peter Fox MS tabled an amendment which would impose a requirement on local authorities to hold a referendum if council tax increases exceeded 5%. The member said holding such referendums would “increase transparency and accountability”. Similar powers exist in England, but does not extend to WalesWelsh Ministers currently have some powers to limit (cap) excessive increases in local authority budget requirements, but these powers have never been used.

THE The Cabinet Secretary considered this amendment as a “significant departure” from the Welsh Government’s approach to “localism”, suggesting that local referendum powers in England were introduced to “restrict the democratic accountability of local government”. The amendment was rejected.

Looking for ‘good value’ for public reviews

The section of the bill that has attracted considerable attention is the new requirement for local authorities to publish council tax notices online. The Bill also removes the current requirement to publish these notices in newspapers. Following a preliminary review of the Bill, the The Committee recognized Article 20 This would not prevent local authorities from publishing such notices in newspapers, but “given current financial pressures, local authorities may choose not to do so in order to save money”.

An amendment tabled by Peter Fox MSrequested that clause 20 be deleted from the bill in its entirety. The MP expressed concerns about access to information for older people, as well as the need to ensure transparency and accountability in local decision-making. Members supporting the amendment shared their concerns about the impact of the provisions on local news media, James Evans MS declaring that it could be “detrimental to the viability of a number of local news media outlets across the country.”

THE The Cabinet Secretary stressed that all council tax payers Local authorities would continue to receive information about council tax as part of their annual bill, but current local authority obligations result in an “inflexible approach”. The minister stressed that clause 20 does not prevent local authorities from publishing notices in newspapers, but that it is important that local authorities “get value for money”. The cabinet secretary asked committee members to oppose the amendment.

Article 20 remains in the bill.

Increased surveillance

The Local Government Finance (Wales) Bill contains a number of measures, but in a number of cases it gives Welsh Ministers the power to make subordinate legislation (regulations) on a range of local taxation matters. This means that the details of what might happen in areas such as non-domestic tax reliefs, business exemptions and council tax reductions will not be known until then. subordinate legislation is made.

Stakeholders, as well as members of the Senedd Finance And Legislation, justice and constitution committees expressed Concerns over the wide regulatory powers given to Welsh ministers in the bill.

The Local Government and Housing Committee had recommended in its Stage 1 Report on the Bill that the Welsh Government include enhanced approval procedures for Welsh Government draft regulations relating to this legislation. This would give Senedd committees “the necessary time to consider it”, beyond what is currently provided subordinate legislation.

Peter Fox MS filed amendments To this end, this would allow for the enhanced scrutiny procedures that the Committee had requested for a specific set of regulations. This would mean that certain regulations adopted under the powers conferred by this bill would be subject to a 60-day review instead of the usual 30 days. The Cabinet Secretary did not consider this to be proportionatenoting that these amendments “could disadvantage Welsh taxpayers by delaying or even preventing the provision of further support”. All amendments relating to enhanced approval procedures were rejected.

Review of new powers

In its first stage report on the bill, the The Committee on Local Government and Housing has called for amendments to ensure a process for reviewing new powers in the Bill, including in relation to: powers to grant or withdraw non-domestic tax relief; powers to specify artificial avoidance techniques (measures used by some to avoid paying tax); and where substantial changes to council tax reductions are made by regulation (such as the modification, reduction or removal of existing reductions).

The review should, according to the Committee, be undertaken before the end of the Seventh Senate and include:

• an assessment by Welsh Ministers of alternative legislative mechanisms for making changes to Welsh law in the context of non-domestic tax reliefs, exemptions, multipliers, anti-avoidance provisions and council tax reductions; and
• an obligation to consult the Senedd.

Amendments The amendment tabled by Peter Fox MS would have imposed such a requirement on Welsh Ministers. In response to the amendment, the Cabinet Secretary noted that the Welsh Government had accepted in principle the Committee’s recommendation and that the Welsh Government:

He will amend the explanatory statement after stage 2 to include a commitment to undertake a post-implementation review of the operation and the impact of the legislation before the end of the seventh Senedd.

The Cabinet Secretary also stressed the Senedd’s ability to “undertake post-legislative scrutiny, if it so wishes”. The Cabinet Secretary called on colleagues to “resist” the amendments, which were rejected.

You can follow the third stage of the debate on the bill (July 9) on Senedd.tv.

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Article by Osian Bowyer, Senedd Research, Welsh Parliament