PEMBROKESHIRE COUNTY COUNCIL has voted to reduce the Second Home Council Tax premium from 200% to 150%, following a close decision on Thursday, October 17.

The change, set to take effect from next April, comes after a Conservative motion to cut the premium in half was decisively defeated. Currently, second homeowners pay three times the standard rate, with a Band E property’s tax rising to around £7,000 annually, compared to £2,300 for local residents.

The reduction was achieved through an Independent Plus Group (IPG) amendment, which passed by a narrow margin.

SERVICE CUTS OR TAX HIKES FOR LOCALS

Whatever the reasoning behind the Conservative amendment, the debate centred on potential future Council Tax rises and deeper service cuts.

Cllr Jordan Ryan was surely correct when he said that those who supported halving the Second Homes Premium were also those most unlikely to support increasing Council Tax to make up the money lost from the Council Budget in 2025/26.

Cllr Di Clements, Conservative Group Leader, proposed halving the Premium, arguing that the current level risked harming tourism in Pembrokeshire. She said it was important to be honest about how the Council used the money the Premium raised. The original intention of the Second Home Premium was to fund affordable housing. However, it was now being used to buttress the shortfall in the Council’s Budget.

She said she had to wonder about the local authority’s financial stability if it was so dependent on the Premium.

Cllr Clement claimed the Council’s message to second-home and holiday accommodation owners is clear: “We don’t want you.”

Cllr John Cole, who supported Cllr Clement, said the Cabinet member for Finance, Cllr Joshua Beynon, had dismissed second-home owners’ representations about the Premium’s impact.

Cllr Beynon responded briskly to Cllr Cole’s suggestion. He reminded the Merlin’s Bridge councillor that part of the purpose of setting a budget was to weigh evidence and reach a conclusion. On balance, the need to reduce the size of any future Council Tax rise on local residents and preserve essential services outweighed second-home owners’ interests.

He reminded Cllr Clements that the decision to use the money raised from the Premium for general funding was made by the Full Council, not the Cabinet. Cllr Beynon said the issue would be debated during next year’s budget setting.

DIVIDING THE PIE

Cllr Mark Carter raised the issue of how the Coucil Tax Premium operated. Not only the County Council precept trebled, but also the precepts for community councils and policing. He found it hard to justify that the policing precept raised in Pembrokeshire was funding policing elsewhere.

Cllr Beynon replied that he would examine the issue raised and report back. However, he added, he could not tell Dyfed Powys Police where to spend its money.

Former Cabinet Member for Finance Cllr Alec Cormack boiled the debate down to brass tacks and asked the Director of Resources to outline the effects of supporting the Conservative motion.

Jon Haswell replied that each 25% cut to the Premium would reduce the Council’s revenue by £1.3m.

In the context of the Conservative motion, that would lead to an additional £5.2m pressure on the Council’s Budget in addition to the existing £32.8m pressure.

That meant that, even if the Council used £3m of its reserves, in addition to deeper cuts to services, the Council would need to increase Council Tax for 2025/26 by 18.87%.

Cllr Cormack observed that councillors ignored Mr Haswell’s warnings last year, and as a result, they faced even tougher choices next year.

Without making deep cuts, the Budget won’t balance, he added.

Alec Cormack said: “If we cut the Premium today, we are voting for a bigger increase in Council Tax in February.”

RESIDENTS SHOULDN’T BANKROLL SECOND-HOME OWNERS

Cllr Alistair Cameron agreed with reducing the Second Homes Premium but said the Council could not afford to do so because of grave budgetary pressures.

“We are having this difficulty because we are trying to pay for care, provide homes, and care for vulnerable children. We cannot afford to make next year’s Budget any harder than it should be.

Alan Dennison said he did not want his voters in Milford Haven to subsidise second-home owners but wanted to find a middle ground.

Cllr Beynon said that if the Conservative amendment passed, schools’ budgets would suffer a 4% cut next year.

Aled Thomas supported Di Clements. He said that suggesting that the only way to balance the Budget was to increase Council Tax was fundamentally flawed.

Cllr Thomas claimed the administration had sown a seed of division between the Pembrokeshire people, the tourism industry, and second-home owners.

He claimed councillors were being gaslit on the Council’s budgetary pressures.

Cllr Tony Wilcox said that councillors should not pander to a minority interest. His mailbox about the need to cut the Second Home Premium was zero.

He added: “Our residents aren’t affected by this. We cannot penalise our voters to pander to those who can afford a second home.”

Tenby Cllr Sam Skyrme-Blackhall said, “I cannot justify raising Council Tax on our residents to reduce second-home owners’ bills.”

Cllr Paul Miller said the impact on tourism was unknown. However, he added: “If you own properties in Tenby and Saundersfoot and you can’t let them for 182 days a year, you’re doing something wrong.”

THE CASE FOR HOUSING

Michelle Bateman said, “75% of the Premium goes to affordable housing. We must increase all kinds of affordable housing; we will not solve housing problems with social housing alone.

She added that the Council would introduce options for shared ownership and equity in spring.

“Any reduction in the Premium meant fewer people would benefit from those schemes.”

She continued: “Housing must be a priority for this Council. I cannot believe that councillors are justified deferring to a well-heeled and articulate minority ahead of those who need this funding.”

Cllrs Delme Harries and Bethan Price highlighted the lack of benefits the Premium brings to rural wards.

Cllr Mike John intervened to highlight the difference between those who inherited old family homes and contributed to local communities and those who did not, ate up the supply of affordable houses, and rented them out on Airbnb.

Josh Beynon sympathised with Cllrs Harris and Price and said services – especially social care – cost more to deliver in rural areas. However, before the pot of money was divided, the Council needed to know what was in it.

He took Aled Thomas to task. Cllr Beynon said this was not scaremongering. He and officers have tried to explain the position in budget seminars, and he would be happy to come to councillors’ wards to discuss it if they wanted. He emphasised seeking a centre ground that addressed reality.

Mike Stoddart was having none of it. He would support the Conservative motion and believed the policy was economically illiterate.

Huw Murphy sought a more radical solution. The system was overcomplicated, he said. Every residential property in Pembrokeshire should pay Council Tax, Cllr Murphy said, and there are too many properties paying nothing.

SYMPATHY FOR SECOND HOME OWNERS SECOND TO LOCALS’ NEEDS

The Cabinet Member for Housing, Michelle Bateman, responded to the debate.

Addressing Cllr Bethan Price, she said £1.4m of funding was being used to develop affordable housing at Glasfryn in St Davids.

Cllr Bateman continued by saying that her sympathy for second-home owners was outweighed by her sympathy for Pembrokeshire’s homeless and those waiting on the housing register.

Cllr Alec Cormack endorsed Michelle Bateman’s view, saying: “We should think of those with no houses, not those with two houses.

The Conservative motion fell.

COUNCIL BACKS 150% PREMIUM

The Council moved to debate Cllr Huw Murphy’s amendment to reduce the Second Home Premium to 150%

Cllr Murphy kept his remarks brief and to the point. He said he supported the idea of a premium and was keen to explore other ways the Council could use the Premium system to raise money more effectively.

Council Leader John Harvey intervened in the debate.

Cllr Harvey said it was wrong for the Council to prioritise the interests of second-home owners over those of permanent residents.

He observed that Cllr Murphy seemed to have retreated from his position last year, when he supported the 200% Premium, even though nothing had changed since last December when he supported it.

Cllr Harvey added: “We don’t have the data to change horses now, though we might next year.

“What worries me more is the loss of income.”

Jon Harvey asked councillors: “What are you prepared to cut or lose, or are you prepared to increase Council Tax to make up the gap?

“I am not prepared to say I voted to reduce second homes Council Tax and put the burden on residents.”

The IPG amended passed by 30 votes to 26 and slashed the Second Home Premium.

The next task for those who voted to shave £2.6m off the Council’s Budget will be to identify cuts or choose Council Tax increases over and above those already forecast in the Medium-Term Financial Plan.

As Cllr Jordan Ryan cynically suggested, those who voted to cut the Premium have no intention of doing either.