Powys council plan to tax firms for rainwater sparks row

A Welsh council wants to tax companies which take its water and energy for use elsewhere.

Powys council said it had written to the Welsh and UK governments asking for permission to do so.

The Welsh government said "a strong case would have to be made" to raise such a tax.

But a Conservative councillor said the proposal would create "friction" between England and Wales.

One reservoir in Powys, Lake Vyrnwy, was created in the late 1800s to supply drinking water to the city of Liverpool.

The old village of Llanwddyn was flooded during the reservoir's construction, with 37 houses, a church and two chapels among the buildings lost.

Powys council's motion called for a levy on companies which take water and energy for consumption outside the county.

It said the money raised would be spent tackling climate change.

The motion was approved at a meeting in December by 40 votes to 19.

But Conservative councillor Aled Davies described the move as a "non-starter" and "not thought through".

"It will just increase costs for our neighbours in England, in Birmingham and Liverpool at a time when cost of living increases are quite substantial. I don't want to see that added to," he said.

Jane Dodds, leader of the Welsh Liberal Democrats, said she was "totally behind" the plans and described them as a "step in the right direction".

"We have access to water here in our rural areas in Powys and we haven't thought about how we can use our natural resources to raise funds," she said.

"An example is of course Lake Vyrnwy where we lost an entire village to build that reservoir and the water went to England.

"So what we want to be doing is saying we want to have some compensation, if you like, that comes back into our county, into Powys, which would then help with our local services."

Powys council did not have estimates of how much money the proposed levy could raise.

But Dr Eurfyl ap Gwilym, an economist who was the Plaid Cymru nominee on the Commission on Devolution in Wales - also known as the Silk Commission - said he believed it could raise hundreds of thousands of pounds.

"The idea therefore of having some kind of levy or tax I think is a very useful one," he said.

The Welsh government said it had invited Powys council to discuss the proposal further.

"Many businesses, including renewable energy businesses and water suppliers, already contribute to the funding for local services through non-domestic rates," a Welsh government spokesperson said.

The UK government said the proposal was a matter for the Welsh government to comment on, but referred to a 2017 protocol which stated that actions by ministers and public bodies in Wales should not have a "serious adverse impact" on water resources in England - and vice versa.