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.
There is a lot of merit in this proposal. Indeed, it could be taken one step further…
Those of us who campaigned for unitary authorities were always aware of the scale issue, which is why we envisaged a greater level of cooperation between councils, including possible joint boards. Frankly we underestimated the parochialism of Welsh local politicians, which is the only reason this cooperation did not evolve organically.
So perhaps the time has come to at least consider a more radical option – removing education and social services from councils altogether.
The decentralisation of the management of schools should in any case be maximised. Schools should run schools, at least within a very broad policy context set by the Assembly. This would finally give the Assembly something useful to do, since it has struggled to find any real administrative role for the last seventeen years.
Meanwhile, there has for some years now been an increasingly strong synergetic case for combining health and social services. Wales could be the first country to turn its National Health Service into a more comprehensive National Health and Welfare Service.
It must, however, be stressed that such changes would be counterproductive, indeed a bureaucratic and anti-democratic nightmare, unless the Assembly was willing to break its centralising habits and delegate the actual management of services as much as possible, while retaining overall policy control.
If it could do that, it might finally do some good, while local councils would be free to focus on those services which really do require local political control. Their involvement in both education and social services was looking anachronistic even before reorganisation in 1996, with local management of schools on the one hand and national standards on the other making them increasingly a surplus level in the hierarchy. They still have an important role to play in all services relating to the local environment, which is where they should concentrate both their energy and their resources.
I agree with Mr Hedges that unitary authorities are not a good idea and were pushed because of claimed disputes about responsibility between county and district councils – a clear case of the cure being worse than the disease.
There is a lot to be said for his proposal whereby education and social care are funded by transfer from the Welsh government. It is time to scotch a myth about council tax, however. The old rates system was a tax on the use of property/ Tat may be unpopular but it is a very sensible tax, easy to collect, hard to evade, ad corresponding very closely with people’s income – despite perceptions to the contrary. Rates were replaced by the community charge or poll tax, which was a failure, widely perceived as unfair and widely evaded as people dropped off electoral roles. The council tax is not a charge for services, it is a thinly disguised return to a tax on property. After the 2008 financial crisis, government tax receipts from corporations and the financial sector plunged. Services have been cut and to limit the cuts other taxes have to be increased, including council tax.
I have a better idea. Lets scrap all local authorities. Have one elected body for all wales. Accountable to the electorate. Council tax and uniform business rates are out of date. Officers in councils are a law unto themselves, with no effective scrutiney from old established bankrupt political parties.
I spent 40 years in the private sector building 7 businesses and also two years in a major welsh local authority. I left the authority with a view that they are incompetant, toxic, waste of money represeting no one except thir own existence. My further twenty year stint running a big local community association an daling directly on their behalf with the council and assembly taught me how utterly useless and corrupt they are and not fit for purpose. They are responsible directly for poverty in wales. Scrap them all.
jeff cuffe has more relevant experience than me. But if he is right what does that say about democracy? What he says implies that the electors are useless and can’t pay attention to their own interests. In that case any government will be self-serving. Scrap them all he says. Where do you stop?