Wales: Council Tax

Thursday 27th October 2011 Lords Chamber

Question

11:21

Asked By

[Lord Roberts of Conwy]

To ask Her Majesty’s Government what steps they will take to ensure that funds allocated to the Welsh Government to enable them to freeze council tax rates are used solely for that purpose.

[The Advocate-General for Scotland (Lord Wallace of Tankerness)]

My Lords, the Welsh Government have received a £38.9 million increase to their departmental expenditure limit in 2011-12. As is usual practice, it will be for the Welsh Government to decide how to use this additional funding.

[Lord Roberts of Conwy]

But does my noble and learned friend think that it is right that nearly £40 million allocated by our right honourable friend the Chancellor of the Exchequer to the Welsh Assembly’s Labour Government specifically to enable them to freeze council tax should deliberately not be applied to that nationwide purpose for the second year running, with the result that over a million Welsh households are to be deprived of a substantial sum when they are facing the fastest rise in living costs for 20 years?

[Lord Wallace of Tankerness]

My Lords, I can readily understand where my noble friend is coming from in asking that question. The consequentials were made available because of the funding made available in England to freeze the council tax to help hard-pressed families. Indeed, many Welsh families might wonder why they are the only households in Great Britain that will not be having their council tax frozen. But the essence of devolution in the Acts that were passed by this Parliament in devolving power to Wales, including power over local government finance, means that it must be a matter for the Welsh Ministers and for the Welsh Assembly to determine what their priorities are. Importantly, Welsh Ministers will be accountable to the Welsh Assembly for their spending decisions and through the Assembly to the people of Wales. That is where the proper accountability should lie.

[Lord Wigley]

My Lords, does the Minister not agree that while the Barnett formula may have been fairly generous to Scotland, it has been shown to be some £300 million light in Wales in meeting the level of expenditure to keep services up to the same standard as in other parts of these islands? Given that, is it not totally reasonable that the Welsh Government should use these resources to spend on health and education, which are very much in need of further resources in Wales?

[Lord Wallace of Tankerness]

My Lords, as I made clear in answer to my noble friend on the consequentials and the block grant given to the Welsh Government, it is a matter for the Government there to determine their priorities and to be accountable for these priorities. If they choose to spend it on health and education, they will clearly be accountable for that expenditure. Separate bilateral discussions are continuing between the UK Government and the Welsh Government on all proposals arising from the Holtham commission, including the idea of a funding floor and the commission’s wider proposals for reform.

[Lord Morgan]

My Lords, at a time when we are debating the Scotland Bill, which gives greater autonomy and freedom to the Scottish legislature to decide its own spending priorities, would it not be paradoxical for us to be restrictive and prescriptive in the case of Wales?

[Lord Wallace of Tankerness]

My Lords, I indicate to the noble Lord that the Government are not being prescriptive. They recognise that the consequentials that were made available are for the Welsh Government and the Welsh Assembly to determine. While additional powers are being conferred on the Scottish Parliament as a result of the Scotland Bill, the noble Lord will be aware that there has been recent agreement to set up the Silk Commission, which will look initially at the financial accountability of the Assembly and, having reported on that, move to looking at its powers.

[Baroness Randerson]

My Lords, does the Minister agree that, as the years go on, the strains imposed by the Barnett formula are beginning to show in the Welsh financial settlement? As a result, for example, education in Wales receives £600 less funding per pupil per year than in England. Would that not be a good way in which the money concerned could be spent?

[Lord Wallace of Tankerness]

My Lords, I am sure that the Welsh Government are getting plenty of helpful suggestions as to how that money might be spent. I sat in on the debate on the Barnett formula initiated earlier in the year by the noble Lord, Lord Barnett, and listened carefully to it. The Government have made it clear that their priority is to reduce the deficit and get our public finances in order. Therefore, any change to the system of devolution funding must await stabilisation of public finances. However, as I have already indicated, separate bilateral discussions are continuing between the Government and the Welsh Government on the proposals arising from the Holtham Commission.

[Lord Trimble]

I presume that there was a Barnett consequential for Northern Ireland as well. Can my noble and learned friend the Minister tell me how much that payment was and what it has been used for?

[Lord Wallace of Tankerness]

My Lords, I can tell my noble friend that the amount was £22.6 million. I regret that I do not know how the Northern Ireland Assembly chooses to use it, but the same principle would apply: it must determine its own priorities and be accountable to the people of Northern Ireland for them.

[Baroness Hollis of Heigham]

My Lords, to return to the council tax freeze, why is it acceptable to freeze council tax in England and Scotland—and in Wales, if it chooses to spend it that way—to the tune of £800 million, so that every Member of this House has their council tax frozen, while, outside this House, the poorest will see their council tax benefit cut by 10 per cent?

[Lord Wallace of Tankerness]

My Lords, the Government indicated that this was an area of UK Government underspend which we were able to use to help support hard-working families with their council tax. I think that it has been widely welcomed that the council tax has been frozen in England; indeed, the Scottish Government had already decided to freeze it in Scotland. With the resources that are available, I think that it will be of benefit to a considerable number of households throughout Scotland and England. It is up to the Government of Wales to determine whether they will wish to follow that. Interestingly enough, in announcing the local government settlement, a Welsh Minister, Mr Carl Sargeant, indicated that local authorities in Wales would have to consider the balance between the need to sustain key services for their citizens’ benefit and the need to limit any financial pressure on hard-pressed households. Even devolution of local responsibility within Wales might lead to some places there getting a council tax freeze.