National Assembly for Wales

Ref: LCO-004

Proposed Local Government Finance Legislative Competence Order

Michael German

Pre-ballot Information: Outline Proposed Legislative Competence Order

Outline of proposed Order

Field 12 (local government) of Part 1 of Schedule 5 to the Government of Wales Act 2006 is to be amended as follows:

Add the following matters to Field 12: local government: provision to amend legislation relating to local government finance in Wales.

Pre-ballot Information: Explanatory Memorandum

Policy Objectives of the Proposed Order

The raising of tax for local government, through council tax & business rates, drives many aspects of the public policy agenda in Wales; from

  • the fairness of the system itself,
  • the impact of paying on many people and on businesses,
  • the need for periodic revaluations of the tax and the efficiency of its collection,
  • the so-called gearing effect which drives up council tax faster than the prevailing inflation rate,
  • the applicability of different discounts and relief schemes
  • the localisation of business rates
  • the accountability of local authorities

The issue has been the subject of many debates in the Assembly and in wider civic society; and of many formal reviews including most notably the long running Lyons review which has a limited remit encompassing Wales and its local government finance system.

The LCO would enable measures to be brought forward to repeal the council tax and replaced it with a different and fairer system, based on ability to pay; would enable the re-localisation of business rates (as the BIDS system has begun to do at the margins) and a more flexible form of rebates and reliefs to better promote other public policy agendas.

Support for reform of the local government finance system, in a way that could only be achieved through this LCO, has come from a wide variety of sources, either in support of abolition or simply reform of the tax, including political parties, newspapers, pensioners groups, specially created lobby groups, and others in civic society.