Darren Millar: Supporting businesses and householders

Speech by Shadow Local Government Minister Darren Millar AM to the National Assembly for Wales. “I am grateful for the opportunity to open this debate this afternoon for the Welsh Conservatives. Most here would agree that the increased burden placed on Welsh households and businesses by the above-inflation increases in council tax and business rates is a matter of great concern.

Given that we are still emerging from one of the most severe recessions in living memory and one from which all of the evidence would suggest that, compared with the rest of the UK, Wales will emerge from even more slowly, that concern is certainly justified.

For the people of Wales, this means that, as a result of the unfair financial pressure placed on local authorities by the Labour/Plaid Cymru Welsh Assembly Government, their pockets are being hit pretty hard.

Let us start by looking at council tax rises this year, which are directly affected by the poor settlements that are dished out year on year by this Government.

I know that the Minister for Social Justice and Local Government has claimed that the latest settlement is fair and realistic, but others, including me, and probably most of the people who have seen their council tax payments double over the past 10 years, would beg to differ.

In contrast to the Minister’s claim to realism and a rather rosy assessment of all things financial, John Davies, the leader of the Welsh Local Government Association, is probably more realistic by correctly describing the recent settlement as the lowest increase in Assembly Government support since devolution.

Unfortunately, that is not fair. The average 3.6 per cent council tax increase in Wales is more than twice the projected increase for England, which is just 1.6 per cent.

We must not forget that the 3.6 per cent figure masks the huge variations between local authorities in Wales. Council tax in Conwy and Anglesey, for example, will rise by 4.7 per cent and 4.5 per cent respectively.

The Labour/Plaid Government’s policy of lower settlements and higher council tax not only hurts people’s ability to get by day to day, but will have a drastic effect on the future provision of services by local authorities.

As I have said before, Welsh Assembly Government policy will inevitably mean that councils will be forced to make cuts to front-line services, putting schools, libraries, leisure centres and weekly bin collections—where they still exist—at risk. Most councils are already bracing themselves for the huge financial challenges that lie ahead.

We have heard in north Wales, for example, that Anglesey will need to make savings of around £10 million over the next three years, while, in the south, Cardiff has announced the need to make savings of £14 million. These are not savings. Let us be honest about it: they are cuts.

The £10 million in savings needed in Anglesey and the £14 million needed in Cardiff are probably extremes, but the need to save money, that is, to cut costs, will no doubt become the norm if the Welsh Assembly Government continues to wear its rose-tinted spectacles. We believe that fair and realistic support must be given to local authorities and council tax payers. Therefore, what can be done?

First, there needs to be targeted support for the most vulnerable. It is worrying to read that, although one in three households in Wales are eligible for council tax benefit, according to the Assembly Government’s own report, £100 million in council tax benefit goes unclaimed every year in Wales.

I know that there are all sorts of different reasons as to why some people claim and why others do not, but, on the whole, the support that is readily available is simply not getting through. That is why one of our policies would be to give every pensioner household across the board a 30 per cent council tax discount.

There would be no complicated forms to fill in or embarrassing interviews with council officers. It would be simple, straightforward and easy to understand: there would be a 30 per cent council tax discount for every single pensioner household.

You may respond that that is fair enough, but how on earth will we pay for it? Well, the second thing that we see as key is a need to reduce the use of hypothecated grants drastically.

No doubt you will argue, Minister, in your response, that, in the 2010-11 settlement, you made some steps towards reducing hypothecation, and I understand that, but you did not go anywhere near far enough.

Around a tenth of the £600 million currently hypothecated in grants to local authorities is swallowed up in administrative costs. By cutting the use of hypothecated grants—those ring-fenced grants that you make available year in, year out, which we have been telling you to stop messing about with for years—you could save around £60 million.

That is money that could go towards supporting a council tax discount for pensioner households and to help other households that are struggling with their council tax bills, as well as to help to protect front-line services.

Another area that needs urgent review is local government pensions. Throughout Wales, band D council tax payers are seeing £273 of their annual bill go towards the massive pensions black hole facing local government. That is unsustainable.

We believe that that needs to be tackled. Obviously, there needs to be discussion about that, but we are not hearing the Assembly Government saying anything about it at all at present.

That bill excludes contributions made by council tax payers to the pensions of teachers, police officers and firefighters. Those index-linked, gold-plated pensions enjoyed by some of the senior council staff—many of whom are on salaries of more than £100,000 per year and some of whom are paid more than the First Minister—are no longer affordable.

There are a number of other measures that, with better support from the Assembly Government, could be taken effectively at a more local level. We need to improve council tax collection rates, for example.

Your own figures, Minister, suggest that local councils are owed more than £78 million in unpaid council tax and that around 4 per cent of the total council tax levied in 2008-09 has not been collected. That is not good enough. Low settlements and high council taxes have become the hallmark, unfortunately, of this Labour/Plaid administration, just as they were of the Labour administration previously.

The second part of our motion is about business rates and the crippling increases that some businesses face as a result of the recent business rate revaluation exercise. In one way, the business rate situation is a similar story to that of council tax—rates are going up while realistic support from Government for business is going down, with cuts in the budget for the economic development department.

What is more, those hardest hit will probably be businesses in the rural communities that already face huge challenges, as they have done over many years under Labour rule. The tourism industry is facing a significant whammy as well. Rural Wales will suffer above-inflation rises in business rates that will exacerbate the loss of local services such as post offices, village shops, and schools.

Tourism-related businesses, including piers, amusement arcades, heritage railways, caravan sites, holiday homes, hotels, and tourist attractions all face big rates rises from April 2010.

For an area such as north Wales, where I come from, Minister, that will be absolutely devastating to the tourism industry, which is already lagging behind that in other parts of the United Kingdom, as we discussed in this Chamber just a few weeks ago. That is not to mention the problems that the rate rises will cause for petrol stations, which are difficult to come across, frankly, in some parts of rural Wales.

Like many Members, I represent a constituency that includes a large rural area, and we rely on tourism as a primary economic generator. It is the bread and butter of our economy, as it is in some parts of west Wales.

Not only will local businesses face the difficulties of trying to tackle the economic recession this year, additionally, they will find that, in extreme cases, their rates will increase 100 per cent. That is a big worry for many businesses, and the Government needs to do more to assist them.

That is why we have been calling for the revaluation exercise to be postponed. To do so would not cost any money, because the situation is supposed to be cost-neutral in terms of the rates that will be collected.

We need you to postpone that exercise, just as is being done in Northern Ireland. It will not cost you a bean, and that is one practical thing that you can do to help. You are showing a lack of urgency, however, that we find astonishing, and we want you to stand up in this Chamber to tell us what you will do to help these businesses that face huge rate rises.

We also want you to extend rate relief, of course, which we have been talking about and talking up for a long time now. It is one of the best tools at your disposal, and you should be using it much more.

We propose rate relief of 100 per cent for all businesses with a rateable value of up to £10,000, and 20 per cent rate relief for businesses with a rateable value of between £10,000 and £15,000.

Minister, if you give us a response today, tell us what you are going to do to support those businesses. They are the backbone of the Welsh economy and they represent the way out of recession. We have to support them if we are ever going to get off our knees. I look forward to your response.”