Mike Hedges suggests a method to link Council Tax more effectively with what is directly spent on community services.
There is a widely held belief by Council tax payers that their Council Tax pays for the services provided by the Council. What has happened in recent years is that Council Tax has increased whilst services have reduced and Council Tax payers have had a variety of reactions varying between anger and confusion.
This is because Council Tax pays for less than ¼ of the total Council services with the rest being funded by the rate support grant and the Councils’ share of business rates both provided by the Welsh Government. The business rate payment to a Council is not related to the business rates collected in the area but is distributed via a formula. Some Council areas are net contributors to the national business rates, most notably Cardiff, whilst others are net gainers from the system.
Looking at Swansea Council income in 2014/15:
| Rate Support Grant from Welsh Government | £241,788,000 | 58.45% |
| National non-domestic rates | £76,436,000 | 18.48% |
| Council Tax- City and County of Swansea | £95,435,000 | 23.07% |
| Total Income | £413,659,000 | 100% |
Expenditure on Education and Social Services was almost 65% of the total expenditure of the Council.
| Social Services | £104,727,000 |
| Education | £160,987,000 |
This means that if Councils protect Social Services, which is a demand led expenditure and Education expenditure then any cuts made by local councils will disproportionately affect the other services.
This is what we have seen occur throughout Wales irrespective of either type of area or political control. Libraries, sports facilities and other discretionary or non-statutory services have seen substantial cuts.
This disconnect between the Council Tax bill and the level of service provided is bad for democracy and bad for Local Government. As other areas of council expenditure are cut in order to protect Education and Social services the percentage spent on Education and Social Services can only increase.
As it stands currently the Government policy is to look for collaboration between Councils and one of the key areas will be collaboration between councils in Education and Social Services and I would like to suggest a possible solution.
The creation of joint boards between Councils to run Education and Social services is something that I have promoted for some time. A criticism of this approach is that it is a backdoor method of recreating the County Councils. Since I, and others, believe that this was the best method of providing these services then I would see this as a very positive move. Those that supported the creation of unitary authorities failed to understand that whilst there are some services that need to be run as locally as possible there are others that need the benefits of scale, not for only for potential savings but in order to provide a comprehensive service.
If these joint boards were directly funded by the Welsh Government, and the main argument for this is that they are providing a local service to national standards, then the rate support grant would disappear from local Councils income and the National Non Domestic rates would be shared between the joint boards and local Councils.
This would produce democratic control and national funding which I consider the best option available for supporting these services. This would then mean that the Council Tax collected would approach 2/3 of unitary Council expenditure and that local decisions such as freezing Council Tax or increasing it for the protection or improvement of local services could be taken, the benefit seen, and the electorate could then express their view on this at the ballot box.
This would lead to both a more responsive local government and also mean that different political parties could lay out a manifesto at election time either prioritising service provision or Council Tax stability.
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