Current council tax system ‘disproportionately impacts poorer areas’ says Merthyr Councillor

By Anthony Lewis

INDEPENDENT councillors in Merthyr Tydfil are calling for a fairer council tax system as they say the current one disproportionately impacts poorer areas.

Earlier this month, a 4.7% council tax proposal was passed in Merthyr Tydfil following a casting vote from the independent mayor after a 15-15 split in the vote for and against the proposal with Labour councillors opposing it.

In a letter to the local MP and Members of the Senedd, Merthyr Tydfil independent councillor and mayor Declan Sammon said the proposed revaluation and rebanding process is not happening soon enough and changes need to be made now, and extra funds must be provided to those councils who have been neglected for so long.

In his letter, Cllr Sammon said the current system “disproportionately impacts poorer areas such as Merthyr Tydfil” and highlighted figures which show that between 1997/98 and 2023/24 Merthyr Tydfil has always been in the top three for the highest average council tax rates including police and community council precepts in Wales.

He also said the county borough is also ranked as having a high council tax rate on the website and the latest available figures show Merthyr Tydfil is ranked at 240 out of all 362 councils in the UK.

But the local Labour MP and MS responded by saying the independent led council chose to hike council tax by 4.7% and that if the council’s finances are now more precarious, the responsibility rests wholly with the independent group who have been in control since 2017.

Welsh Government said it is making “significant progress” with plans for a fairer and more progressive system,

In a document highlighting council tax figures in Wales over the last 28 years, Cllr Sammon said: “There is something wrong with the current system when those living in some of the most deprived areas of Wales are continually paying the highest rates of Council Tax.

“Local Authorities have been starved of vital funds for years and are
then left to face the wrath of residents.”

Cllr Sammon said: “Welsh Government know the current system is unfair and in December 2021 the First Minister belatedly told how they were considering the first revaluation of residential properties since 2003.”

Cllr Sammon said a 12-week consultation period began on July 12, 2022 and
ended on October 4, 2022 which covered a potential 2025 revaluation and rebanding, a review of council tax discounts, disregards, exemptions and
premiums and a review of the council tax reduction scheme.

Cllr Sammon said: “If the Welsh Government know that the system is unfair, and that the current system disproportionately affects those living in the most deprived areas, why are they waiting until 2025 to start the revaluation and rebanding process?”

The reform that the independent administration at Merthyr Tydfil Council would like to see

Cllr Sammon pointed to figures from Stats Wales which show that including the police precept and any community council precepts in 2023/2024, Band A properties are set to pay £1,436.60, Band B £1,676.03, Band C £1,915.47 and Band D £2,154.90 (£1,828.34 towards the county borough council itself) ranking the county borough second highest out of the 22 Welsh councils.

He cites figures from Stats Wales going back to 1996/1997 which show that Merthyr Tydfil has been in the top three for average council tax including police and community council precepts since 1997/1998.

He mentioned figures that show the increase in Band D council tax in Merthyr Tydfil since 2018/2019 has been 24% with only six councils lower than that and the highest being 35%.

A notice of motion from independent councillors which was passed by council in July 2022 proposed that the council write to the finance minister expressing their preference for council tax and revenue support grant reform.

A letter sent by the independent administration at the time to Rebecca Evans MS, the Welsh Government minister for finance and local government said that in approving the motion, the council supports a “continuous and proportional system removing the current banding structure and applying a fixed tax rate as a percentage of property values, but retaining existing discounts, premiums and exemptions.

Although the letter said this would result in a 24% reduction in the tax base for Merthyr Tydfil, adversely impacting upon the council’s revenue-raising ability, to offset this negative impact the Institute of Fiscal Studies model suggests counter changes in the distribution of the Revenue Support Grant (RSG), resulting in a process of “resource equalisation.”

It said this it is projected that changes in grant funding to fully offset changes in tax bases would lead to an additional £4.6 million (4.2%) in revenue support grant for Merthyr Tydfil and that it is projected that Merthyr Tydfil would experience the highest reduction in average council tax bills (around 20%) reflecting its status as one of the councils with the lowest average property values in Wales.

As a result, the average net council tax bill for Merthyr Tydfil is estimated to fall by up to £200 under the “continuous and proportional system.”

The letter said said if the reform is based on “pure revaluation” using updated property values to assign properties to council tax bands, the average net council tax bill for Merthyr Tydfil is projected to increase by £7.

The letter said the “continuous and proportional system” would narrow gaps in property values between high-price and low-price parts of Wales, acting to reduce geographical wealth inequality saying that it is projected that
average property values in Merthyr Tydfil would increase by nearly £9,900.

The response from the local Labour MS and MP

Responding to the letter from the independent mayor Cllr Sammon, Gerald Jones MP and Dawn Bowden MS said: “You will be aware of the deepfelt anger of the public that the Independent-led council chose to hike council tax by 4.7%.

“As the council has an equal number of Independent and Labour councillors, this increase was only imposed after you used your casting vote as mayor.

“You will recall that 16 months ago, the council’s Independent Cabinet Member for Finance was boasting that the authority was in its “strongest financial position for decades.’ If the council’s finances are now more precarious, we’re afraid that the responsibility rests wholly with your Independent group who have been in control since 2017.

“We note that the Welsh Local Government Association (WLGA) welcomed the recent settlement from the Welsh Government.

“That settlement is based on a funding formula agreed with the WLGA, of which Merthyr Tydfil Council is a member, after full consultation with all local authorities in Wales.

“If you feel that your Independent colleagues who represent Merthyr Tydfil Council on the WLGA have not been sufficiently robust in their submissions to challenge of the current funding formula, this is an issue you should take up with them.

“Particularly so as the Welsh Government’s Finance Minister has repeatedly indicated that she would be more than happy to consider a different funding formula if the WLGA could agree on what a different funding formula might look like.

“In terms of reforming council tax in Wales, we are shocked that you are not aware that the Welsh Government is committed to creating a fairer and more progressive council tax.

“This commitment was made in its Programme for Government, and a report on the consultation replies is available on the Welsh Government’s website.

“We note, however, that representatives of the WLGA have asked that the Welsh Government do not rush the reform process.

“Merthyr Tydfil Council, through the WLGA, would be involved in this review.

“It is again shocking to learn that, as the Independent group controls the council, you have not been kept up to date on this work. You may want to take this up with your leader.

“Your letter also calls for council tax re-banding to to happen faster, potentially increasing the financial burden on already stretched residents – exacerbated by your council tax hike.

“In closing we must express our surprise to receive such a submission from you signed as mayor of the county borough.

“We had always understood the role of mayor to have a civic and not a political role.

“Quite simply, if you didn’t favour the 4.7% council tax hike, you should not have voted for it.”

Welsh Government’s position on council tax reform

A Welsh Government spokesman said: “We’re continuing to lead the way on council tax reform and we’re making significant progress with our plans for a fairer and more progressive system, which the evidence and experts agree is one of the most beneficial actions we can take to reduce wealth inequalities.

“Delivering a reformed tax in April 2025 is the earliest opportunity we can achieve such a transformative aim. The work involves the detailed valuation of almost 1.5 million properties in Wales, a large volume of new legislation and significant changes to administrative arrangements. The timeline we have set out will ensure it is deliverable, has the greatest positive impact, and allows time for democratic scrutiny.

“We also achieved a great deal in recent years to improve the existing council tax system. We have removed the threat of imprisonment for non-payment, created a new exemption for young care leavers, improved access to discounts for people with severe mental impairments, and launched national campaigns to raise awareness of the available support.

“Our Council Tax Reduction Scheme continues to help low-income households and vulnerable people to pay their bills, and we encourage everyone to take advantage of the support available to them.

“We are confident our work will make a significant difference and we have also been clear we are leaving open the potential for further and more fundamental reforms in the longer term.”

The response from a Plaid Cymru MS

Peredur Owen Griffiths MS of Plaid Cymru also responded to Cllr Sammon’s letter saying that he agrees that the current council tax system is unfair and that it’s “perverse” that council tax is highest in areas where there are the greatest levels of deprivation.

He said Plaid Cymru have been calling for reform of the council tax system for many, many years due to the “unfairness of the status quo.”

He said that this is why they insisted this form part of the co-operation agreement with Labour who he said “have been reluctant to do anything about it till now.”

He said it formed part of Plaid Cymru’s 2016 Senedd election campaign but he said Labour won the election and “nothing happened for the next five years despite them representing the areas hit hardest by high council tax.”

He said he regrets that they do not already have a fairer, less regressive system in place but that he is heartened that “the wheels of change are finally in motion.

He said: “I look forward to the council tax being reformed. It cannot come soon enough.”

Cllr Sammon’s comments

Cllr Sammon said “The response received from Dawn Bowden MS and Gerald Jones MP was hugely disappointing, and they have seemingly ignored 28 years of statistics showing that residents in Merthyr Tydfil, one of the poorest areas of Wales, are paying one of the highest rates of Council Tax. They have instead tried to deflect that the high Council Tax rate is solely down to the Independent Group when Labour have been in power in Wales for 25 years, and 13 out of the 28 years in Westminster.

“The response from Peredur Owen Griffiths MS was positive, and clearly shows they understand that the current system is unfair and that changes can’t come soon enough.

“My initial letter was never meant to antagonise or be confrontational, it was only meant to highlight that Merthyr Tydfil needed fairer settlements.”

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