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Council Tax

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Sue Essex, Minister for Finance, Local Government and Public Services

Local authorities were required to set their budgets and associated council tax levels for 2006-07 by 10 March. We have now received the relevant figures from all authorities in Wales, and I am pleased to be able to report to the Assembly that the average increase in council tax, including police and community council precepts, will be 4.5 per cent for 2006-07. This is in line with the increase in council tax in England. In Wales, it will be the second lowest average increase since the introduction of council tax, the lowest increase being 3.8 per cent for the current financial year.

These figures reflect the mature and responsible approach that has been adopted by local government to the budget-setting process. It also reflects the good final settlement provided by the Assembly Government.

The unitary authority element of the council tax will increase by an average of 4.4 per cent. Combined with the 5.1 per cent increase in Assembly support that I announced through the settlement, this provides local authorities with the funding to deliver the services that the people of Wales are entitled to expect. Nine authorities set increases of below 4 per cent, with Denbighshire setting the lowest increase at 2.1 per cent. Only two councils, Newport and the Vale of Glamorgan, agreed increases above 5 per cent. The highest increase set was the Vale of Glamorgan at 5.5 per cent.

Newport and the Vale of Glamorgan put forward arguments that they have traditionally set budgets below their standard spending assessments and, as a result, Newport has the second lowest council tax in Wales, while the Vale of Glamorgan has the sixth lowest. I therefore concluded that the circumstances this year did not warrant my using the reserve powers that I have available to limit budget and council tax increases. I felt it important to have discussions with the authorities to challenge their increases but, ultimately, local authorities are accountable to their electorate for the decisions that they make, and I would wish to intervene only in exceptional circumstances.

With regard to the police, all four of the police authorities in Wales set precept increases of 5 per cent. As policing is a non-devolved issue, I stressed the importance of police authorities in Wales acting in line with the expectations set out by the Home Office for police authorities in England. I am pleased to report that rises of 5 per cent are in line with those expectations. In the lead-up to the budget setting, I had discussions with the police authorities, and I am aware that, in the case of Dyfed-Powys Police Authority, the transfer of police pensions out of the police grant created particular funding difficulties for 2006-07. Dialogue with officials on this matter is continuing. However, I am pleased that the authority recognised the need to act reasonably in setting its budget despite these difficulties.

The full details of the council tax figures for 2006-07 are contained in a statistical release to be issued on 23 March.