Councillors vote to cut council tax premiums in holiday hot-spot

Bruce Sinclair, local democracy reporter

Second homes council tax premiums in a popular holiday destination are to drop from the current 200 per cent rate to 150 per cent, despite warnings it could lead to a council tax rise next year of as much as 14 per cent.

At today’s (17 October) meeting of Pembrokeshire County Council’s full council, two attempts to lower the second homes council tax premium in Pembrokeshire were made, with members hearing the changes could lose the council between £2.6m and £5.2m, and could increase next year’s overall council tax rise to as much as 18.8 per cent.

Pembrokeshire is currently expected to see an 11.14 per cent council tax rise in the next financial year.

Second-home owners, since this financial year, have been paying a 200 per cent premium on their council tax, effectively a treble rate, following an increase from the previous 100 per cent (or double rate) premium.

300 per cent

Under Welsh Government legislation, local authorities are able to increase the council premium on second homes to as much as 300 per cent, effectively a quadrable rate.

Long-term empty properties in the county are also currently charged a premium council tax rate: 100 per cent after 24 months, 200 per cent after 36 months, and 300 per cent after five years.

At the October 17 meeting of Pembrokeshire’s full council, members were recommended to back the premium remaining at the current 200 per cent, with the long-term empty property rates also remaining at the current levels, and to write to Welsh Government asking for a reduction in the 182-day criteria for holiday lets rate relief.

At the meeting, two alternative proposals for a lower second homes premium rate were brought before members; a 100 per cent premium by Conservative group leader Cllr Di Clements, and 150 per cent by Independent Group (IPG) leader Cllr Huw Murphy.

Financial pressures

Members were told by director of resources Jon Haswell that a reduction of the premium to 100 per cent would lead to additional financial pressures to the council of £5.2m, which would lead to a predicted council tax increase of 18.87 per cent against an expected general increase of 11.14 per cent.

Cabinet member for finance, Cllr Joshua Beynon moved the recommendations be backed, adding: “Every 25 per cent reduction would reduce the amount raised by the council by £1.3m, already we have a very difficult financial situation, that is the reality of local government finance, we are stretched in terms of demand for services.”

‘Cash cows’

Cllr Clements, in her amendment, said the council was using second-home-owners as “cash cows,” with the revenue raised used to fund the general budget.

“This policy is a blunt tool, for me it’s about fairness and proportionality.

“I question the financial sustainability of this local authority if it relies on these council tax powers; when second home-owners throw in the towel where will the council go?

“In relation to second home-owners the message [we send] is clear: ‘We don’t want you’.”

Cllr Tony Wilcox said that any reduction in the rate for second-home-owners would impact on ordinary council tax-payers in the county.

“Why are we penalising 85-95 per cent of our own people to pander for a political point?” he asked, adding: “The overwhelming majority of our residents aren’t affected by this, we are going to penalise the majority.

“I really can’t see how we are contemplating really high council tax rises for the majority of our county.”

Cllr Clement’s amendment was defeated; Cllr Murphy’s own amendment then being heard, with Conservative group member Cllr Aled Thomas, urging his fellow Conservatives to support the independent group, saying: “This is a half-way step, I would hope the group would put their vote behind the IPG.”

‘£2.6 million loss’

Council leader Cllr Jon Harvey, who said Cllr Murphy had previously been supportive of the 200 per cent rate, warned: “On this proposal we are talking about £2.6m loss to the council, or about three-and-a-half per cent on council tax. What additional services are you prepared to cut, or are you prepared to increase council tax over and above?

“I am not prepared to justify to our residents why I voted to reduce second homes tax and then put that burden or service cuts on them, they certainly will be worse off in my opinion if this goes through.”

After Cllr Murphy’s ammended was backed, a later proposal by Cllr Alan Dennison to change the empty property premium to 300 per cent after two years was deferred, being considered by the council tax working group before coming before Cabinet at its December meeting.

Members also agreed to write to Welsh Government asking them to reduce the 182 days let threshold.