Ref: LCO-064

Proposed Local Government Finance (Council Tax) Legislative Competence Order

Bethan Jenkins

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:

Provision relating to local government finance in Wales.

Pre-ballot Information: Explanatory Memorandum

Background

The law relating to Council Tax is contained in the Local Government Finance Act 1992 (“the 1992 Act”).  Billing authorities (in Wales county or county borough councils) are to levy and collect a tax – known as council tax – which is payable in respect of every dwelling in the billing authority’s area. The Act (section 11) provides that the council tax payable in respect of a particular dwelling is to be discounted in specified circumstances. The classes of are prescribed in the Council Tax (Prescribed Classes of Dwellings) (Wales) Regulations 1998.  The 1992 Act does not provide that in respect of certain dwellings that the council tax payable in respect of those dwellings may be increased nor does it enable the Welsh Ministers to make regulations prescribing classes of dwellings in respect of which a billing authority could determine that a higher rate of council tax should be payable in place of that payable in accordance with section 6.

Policy Objectives of the Proposed Order

It is unclear how many second homes exist in Wales but it is thought to be between 20,000 and 30,000. In some mostly rural and coastal areas, for example, in the north and west of Wales, they have a significant impact on communities. (Source for the figures: Second Homes in Wales, 2005 A comparison of the sources of data about second homes in Wales (Statistical Directorate, Welsh Assembly Government, April 2005)

The proposed order will give the National Assembly legislative competence over local government finance, enabling a measure to be brought forward to provide a higher rate of council tax in respect of certain classes of dwellings the intention being to (indirectly) encourage owners to bring back into use empty second homes and, to raise additional funds which could be directed through a variety of methods (e.g. utilizing those powers currently available to local authorities to assist first-time buyers) to the provision of affordable housing in the authority’s area.

SUPPORT RECEIVED

Shelter Cymru (Building Future Wales) and a petition (PET-03-086) presented to the National Assembly’s Petitions Committee regarding holiday homes and council tax.