Across Wales, Councils are currently sitting on over £2 billion pounds in usable reserves, yet residents are facing an average Council Tax rise of 7.36%. Year after year, the people of Wales are hit with Council Tax rises, with many having seen their bill double since 2010, yet Councils are hoarding billions of pounds in usable reserves.
The Welsh Labour Government’s Local Government Funding Formula is allowing some Councils to hold over £200 million pounds in usable reserves, creating significant funding gaps between neighbouring Councils, whilst using population data from the 1990s.
Staggeringly, the latest Local Government Funding Formula assumes that an 84-year-old is assumed to cost a council an additional £7.34 and an 85-year-old is assumed to cost an additional £2,243.67.
In addition to this, the Local Government Funding Formula is enabling Newport City Council to receive a whopping £600 per head more than its neighbouring Monmouthshire County Council.
In the Senedd today, the Welsh Conservatives brought forward a debate calling on the Welsh Labour Government to commission an independent review of the Local Government Funding Formula, work with Councils to ensure usable reserves are used to keep Council Tax low and introduce referendums for any Council proposing a Council Tax rise above 5%.
Furthermore, the Welsh Conservatives called on Local Government in Wales to become more efficient, along with ensuring more cross-Council working and the sharing of resources and services.
Commenting after the debate, Welsh Conservative Shadow Secretary for Housing and Local Government, Laura Anne Jones MS, said:
“Under the Welsh Labour Government, the Local Government Funding Formula remains broken.
“It cannot be right that people in Wales are facing a 7% hike in their Council Tax, whilst Councils are sitting on over £2 billion pounds in usable reserves.
“In the Senedd today, we called on the Welsh Labour Government to fix Local Government in Wales by commissioning an independent review into the Local Government Funding Formula. We also urged them to keep Council Tax as low as possible by encouraging the use of usable reserves and encouraging the sharing of resources across council boundaries and efficiency savings. Unfortunately, Labour voted against these proposals and will continue with an unfair system.”
The motion which was debated in the Senedd today reads:
To propose that the Senedd:
1. Recognises the crucial role that councils play in delivering local public services and the funding challenges they face.
2. Notes that councils hold over £2 billion in usable reserves.
3. Regrets that the proposed average council tax rise in Wales for 2025-2026 financial year is 7.36 per cent.
4. Calls on the Welsh Government to:
a) commission an independent review of the Welsh local government funding formula;
b) work with councils to use their usable reserves to keep council tax as low as possible;
c) require any council proposing a council tax rise of 5 per cent or more to hold a local referendum and obtain a yes vote before implementing the proposed rise;
d) reduce the bureaucracy of Welsh local government to make it more efficient;
e) coordinate with councils to ensure cross-council working and the sharing of resources and services, along with an increase in digitalisation where possible, to ensure efficient delivery of services and to cut costs; and
f) work with local government to develop a business-like culture to ensure effective use of tax-payer funding, whilst cutting waste and reducing spend on vanity projects.
