Legislation, Justice and Constitution Committee

Yes, of course. Debra, do you want to start?

Hello. I'm Debra Carter, deputy director for local government finance reform, and policy lead for the Bill.

Hello. I'm Ruth Cornick, lawyer with legal services at the Welsh Government.

Hi. I'm Simon Tew. I'm the Bill manager for the local government finance Bill.

That's great. Thank you. I will say in advance that, as we've looked at this Bill, it's pretty clear that we're not going to be able to, in an hour's session, get through all the detailed questions that we want to. We'll try and get to the main areas today, and it might be, with your help, Minister, we cover off a lot of areas, but we may need to write to you subsequently as well. I think we have enough time to do that. But we'll do our very best here. Can I ask, right at the beginning, our standard request, whether you consider that the Bill is within the Senedd's legislative competence? But could I also ask you, Minister—? Within the Bill, the explanatory memorandum doesn't discuss human rights, so I wonder what account have you taken of human rights in preparing the Bill. So, Minister, just an opener.

Thank you. Good afternoon to the committee. And just to say, Chair, that I'm happy to deal with anything through correspondence, but also to come and do a repeat—. I was going to say 'performance', but that's not quite the right word. I can do a repeat session with committee if that's needed as well.

That's great. Thank you.

Yes, we do believe that the Bill is within the legislative competence, and also we know that's the Llywydd's verdict as well. And then, in relation to human rights, obviously we've considered all of the relevant articles of the European convention on human rights. And where those rights are qualified, I'm satisfied that any possible interference with them can be justified on the basis that the provisions are necessary and proportionate in pursuance of what is a legitimate aim. Those particular areas in the Bill that are affected relate to the duty to provide information, which is section 12, and then in relation to the unoccupied hereditaments charitable rate relief, section 6. We can provide more detail either now or in correspondence on that. And then in the explanatory memorandum, I also say that I'm satisfied that the provisions are within the Senedd's legislative competence, and by implication then, of course, that means that it includes compatibility with the European convention on human rights. But I'm more than happy, if necessary, to clarify that in any updated explanatory memorandum, if the committee would find that helpful.

Thank you, Minister. Alun, we'll come straight to you on the development of the Bill.

Thank you. You've put forward a number of different proposals for reform in terms of local government finance recently. I'm not convinced that they all need legislation in terms of what you were proposing a few weeks ago. So, what does this Bill do? What's the purpose of it? And why do we need it now?

You're absolutely right that much of what we're intending to do in the space of local government finance reform, particularly so around the modernisation and work around making council tax fairer, doesn't need legislation to underpin that—for example, the revaluation work, and so on. But what this Bill does is, in respect of non-domestic rates, it will increase how often the values of all properties are updated, to do that every three years, so that would be putting that on a statutory footing. That's something that businesses across Wales have been calling for us to do for some time.

But you can do that anyway.

No. I think that you do need primary legislation in order to introduce or change the date of a valuation. We've previously asked the UK Government to do that on our behalf. We delayed it after the pandemic, for example, and required the UK Government to legislate on our behalf to do that. So, at the moment, it's not on that three-year cycle. So, this Bill would put the—

No, but you can move forward with that proposal, surely.

You can change the date of individual revaluations, but what the Bill does is change the cycle from a five-year cycle to a three-year cycle.

Alongside that, it provides more flexibility in the space of reliefs and exemptions. And again, that's a complex area, where, for some of these exemptions and reliefs, you would have to introduce primary legislation—for example, charitable rates relief. And in other areas, it's secondary—small business rates relief, for example. So, it's a kind of mixed picture that we're hoping to provide some clarity on there. It also enables changes to the calculation of payments for different categories of ratepayers. And it also improves information provided by ratepayers and aims to close some of the known loopholes that increase the ability for there to be avoidance, but then, also, to futureproof that as well.

And then, on the council tax side of things, it's about providing more flexibility for the organisation and labelling of bands; providing more flexibility to make changes to discounts; introducing updates to the values of all properties on a five-year cycle; and then, also, removing the need to publish details of council tax in newspapers. So, as you say, lots of the reform programme sits outside, but this is the kind of legislative framework for futureproofing.

You used interesting terminology in answering the questions, Minister, in terms of providing flexibility. It's a Bill that provides you with powers to do a wide range of things that aren't necessarily understood today. And by the time this Bill reaches the statute book, of course, we'll be within two years of another election, so it will provide a Government yet unelected with all of those powers as well. So, I'm interested as to why you feel that you need the legislation today and how you intend to use it, because I think we do need a bit more meat on these bones, if you like, before we are content with the sorts of powers that you are seeking.

I think in many ways it will give the Senedd more power over decisions that are taken here in Wales in respect of non-domestic rates and council tax. And that's because over recent years we've asked the UK Government on 13 different occasions to legislate on our behalf. So, we're keen to have these decisions made here in Wales. And then, it will also allow future governments to think creatively about different things. With the multiplier, for example, we only have the one multiplier at the moment. It might, in future, allow a government to consider providing a different multiplier for properties in particular locations to stimulate those areas, or, potentially, to do it for different categories of businesses to respond to particular issues in those categories. So, we don't have any plans in those spaces at the moment, but it does provide a future government with more flexibility. And we're seeing some of the challenge happening at the moment. The UK Government recently made announcements in respect of the multiplier that applies only to small businesses in England. We only have the one multiplier here in Wales, so it does mean that we have different choices available to us.

I understand that. I appreciate those arguments and I have no issue with that at all. I'm just concerned that the argument is that we're providing these powers for Wales and the rest of it—I accept that—but we're actually providing a lot of powers to the Minister as well, and that's where I'm a little bit anxious.

In terms of where we are at the moment, you're consulting on council tax, which is the main issue that I've seen in political debate and public debate recently. What consultation have you actually conducted on this legislation, and do you think that if you are taking the powers that you seem to be wishing to take in this legislation, it would have been better to have published something of a draft Bill to enable people to understand the powers that you are seeking, rather than simply to publish this Bill and then make the argument that you're making this afternoon?

We have consulted comprehensively, I think, on the Bill. There's been the consultation on reforming non-domestic rates in Wales, which was carried out last year, and stakeholders were generally supportive of our proposals. Actually, the proposals didn't just emerge at the consultation point; they were after an awful lot of engagement with people who are working in the local government finance administration field, but then also businesses and so on as well. One example is that three-yearly revaluation cycle.

But then we've also had the council tax reform 'A Fairer Council Tax' consultation, and that was carried out last year as well. It was more of a mix in terms of the responses that we had to that consultation. Those organisations that are particularly concerned with social justice, fairness and having a fairer council tax were very supportive of our proposals. The response from the public was more mixed, and I think that we learned through that that we need to be very clear with people. There was lots of suspicion that the changes were there to raise more council tax overall; we've been trying to be very clear that that's not the plan, it's to raise what we raise more fairly. And then there was also a disconnect, really, in terms of people's understanding of what they receive as a result of paying council tax. People identified very closely with the waste collection, but then less so with education, social care and so on. And then, also, there was that concern that, because somebody's house had increased in value over the last 20 years, it automatically might mean an increase in council tax. Again, that's not the case. So, it taught us a lot, really, about the kind of work that we have to do in terms of making things clear to the public. So, one of our plans, and it's not in the legislation but part of the wider picture, is about having a website where people can access more clear information about council tax.

Just to go back to your first point, the Ministers will have powers, but lots of the work is about having secondary legislation that is subject to the affirmative decision by the Senedd, and we would obviously consult on particular proposals, as well.

I accept that, Minister. I've got no issue with that. A final question in this section would be about the Non-Domestic Rating Act 2023. You've mentioned, perhaps in passing, as you've been answering the questions, your relationship with the United Kingdom Government. You didn't seem to be—perhaps I'm reading too much into this; I apologise if I am—overly positive about the difficulties you may have encountered in dealing with the UK Government on these matters. So, I was just wondering if you could outline in a bit more detail the relationship that you have with the UK Government over these matters, the way in which you've tried to approach the development of this Bill and the relationship between this Bill and the NDR Act.

On this occasion, things have been better in relation to our discussions with the UK Government, and perhaps Debra can reflect on discussions at official level. But I think the level of sharing of information has been very good, so, in developing our own proposals, we have had good sight as to what the UK Government was proposing in its Act, and we've worked very carefully to ensure that those two Acts are complementary to one another. So, I think that the working relationship in this particular area of non-domestic rates and council tax has been better than in most others.

I would absolutely endorse that. We've had a long-standing relationship with the UK Government in terms of policy development in this area, particularly around the Non-Domestic Rating Act 2023. In terms of what the UK Government was seeking to achieve in terms of reforming NDR in England and what we were seeking to achieve in Wales, there is a great deal of overlap, and much of what is in the NDR Act for England is reflected in the Act that we're taking forward in Wales. The provisions that we've taken in the NDR Act relate to time-constrained things where ratepayers in Wales would have been disadvantaged if we had not taken them in the UK Act, but it also kind of comes back to your question about the extent of consultation as well. It's probably worth noting that the consultations that the Minister referred to were themselves the end of quite a long process of interaction with stakeholders, and also development of policy across the UK, so it's not just actually about a relationship with the UK Government, but also the Scottish Government and Northern Ireland. We do collaborate much more in this area, I think, than perhaps in some others.

Okay.

Thanks, Alun. Alun mentioned there the issue of delegated powers and so on, and we're always interested in balance between those and what is actually on the Bill, so James is going to take us into a bit more detail.

Yes. Minister, following on from what Alun was saying about delegated powers, and the wide range of delegated powers that Ministers are going to have with this Bill, are you satisfied that it strikes the right balance between providing sufficient detail on the face of the Bill against providing the delegated powers to Welsh Ministers?

Yes, I do think it strikes the right balance, and that's partly because the local government finance field is one that is constantly evolving, and I think that we need to be agile in being able to respond to things, but then also to ensure that, where decisions are important and need to be taken by the Senedd, we have the affirmative procedure, and that we have a commitment to consult on particular proposals as well. When you look at the things that we're proposing the negative procedure for, I think they're things that I hope the committee would think were sensible: around the date by which copies of draft council tax valuation lists are sent to local authorities, amendments to secondary legislation that are consequential on the changes introduced by the Bill, and then the content of notices issued in relation to the duty on ratepayers to provide notifiable information to the Valuation Office Agency. So, I think the negative procedure there is a proportionate one, which I hope the committee would agree with.

You were talking earlier about the reason why you need to legislate and why it's now clear why you had to do it, but I'm interested why those things are not on the face of the Bill.

I think that is partly because things change so often. The fact that the UK Government has legislated on our behalf 13 times in recent years shows how frequently things do change, and we do need to have the opportunity to be agile in response. I'll give you an example in relation to the council tax reduction scheme. We provide reliefs for a whole range of circumstances through that. Recently, we've introduced reliefs that recognised the role that hosts have played for people arriving from Ukraine. So, that was something that we couldn't have envisaged, when—well, never would have—the original legislation was put in place, but, even now, we couldn't really have envisaged that kind of situation. And then, other examples include ensuring people aren't worse off because of the payments through the contaminated blood scandal and so on. So, I think that that kind of need to be responsive is important.

Okay, that's fine. You also said a bit earlier that changes are needed as soon as possible, so we can enable things to happen. But why aren't more changes being made in the Bill, instead of you taking a lot of powers to make these changes at a future date by regulation? So, why have you decided to do that instead of actually putting it on the face of the Bill and doing it via the Bill rather than regulation, if it's needed now?

I think the flexibility is needed now, or the ability to respond, because things, as I say, happen all the time that we might need to respond to in order to either provide businesses with the support that they need, or households with the support that they might also need in respect of council tax. So, I think that putting everything on the face of the Bill would be probably too rigid in this kind of circumstance. But I think Debra might have some something on this as well.

Yes, if I just come in, with this legislation, it's worth remembering that we're not dealing with a blank slate. The existing primary legislation itself contains a lot of secondary legislation-making powers, but it's a very complex landscape where what we have at the moment are things that are prescribed in primary legislation, allow some things to be changed in secondary legislation, and others not, and that's not necessarily in a very rational or coherent way. So, to give a couple of examples, Ministers can make changes to certain council tax discounts. We were able to create the discount for young care leavers, for example, and also an exemption for young care leavers through secondary legislation, but it required primary legislation to create a complete exemption for care leavers who were sharing accommodation with people who were not exempt, and there was a three-year gap between being able to do those things. There are lots of examples of that kind of complexity. Another one is the exemption for people with a severe mental impairment, where the nature of the discount can be changed but not the title. So, what we have at the moment is actually a not very responsive legislative landscape.

And the other aspect I think is that we are talking about legislation that requires a lot of technical detail that is only appropriately covered in secondary legislation. The council tax reduction scheme, for example, runs to almost 800 pages of regulations. So, that sort of thing is not appropriate to try to cover on the face of a Bill, and that's only one example—the discount regulations, enforcement, billing, et cetera are all extensive secondary legislation.

A final question, Cadeirydd, if it's okay. One thing you talked about earlier, Minister, was improved scrutiny. You said that because a lot of this has been done by the UK Parliament it really hasn't had that much Senedd oversight of it. But, we are here as a committee to actually defend the rights of the Senedd to scrutinise legislation here. Do you not see the view that some people say that, with the sheer amount of regulation-making powers in this Bill, it does give rise to bypassing detailed Senedd scrutiny of these matters. We look at regulation-making powers all the time in this committee, but some other Senedd committees who have got a detailed interest in some of these things don't see it. So, could you understand that concern as well, that this could also bypass Senedd scrutiny as well?

I think the Bill expands on the opportunities that the Senedd has for scrutiny, as compared to the current system. So, I think it's an improvement. Obviously, I'm happy to take the committee's views, but—

How?

Well, by the commitment to have the scrutiny in the affirmative of regulations, for example, and then also by the wider consultation work that we'll do, which I know the Senedd will take an interest in as well. Certainly, it's a big step forward as compared to asking the UK Government to legislate on our behalf, as it did. So, a couple of examples, really: there's no power in the Local Government Finance Act 1988 to amend the date of revaluation. So, that's something that we would like to propose to include in our legislation. But, we had to use the Growth and Infrastructure Act 2013 to postpone the 2015 revaluation, and then also the Non-Domestic Ratings (Lists) Act 2021 to postpone the 2022 revaluation. So, those are just two examples where the UK Government legislated on our behalf because we didn't have the means to do so.

It just feels a little bit, Minister, like it was not ideal before and it's not going to be ideal now, just a little bit better. We've had another Government Minister come in and say that half the Senedd Members don't even understand some of the regulation-making powers coming through here. So, it does give rise to: is the Senedd going to be able to scrutinise these things properly with the sheer amount of regulation-making powers and the sheer amount of work that we have to do here as well, because you could be putting very fundamental changes through via regulation that don't get the proper scrutiny that they deserve?

So, I would say that that's a matter for the Senedd in terms of prioritising its scrutiny. But, I suppose you can't have it both ways, in the sense of wanting plenty of information and detail to scrutinise versus a more simple, streamlined system. So, if there are things that we can do, working with committee, to support the scrutiny work, obviously, we're keen to do that and hear any recommendations that you have.

Well, James has probed this very, very well, and we understand you're trying to get the balance right—which you've described as some very technical, long, elaborate ones—and we're trying to get the balance right, to say, 'Well, yes, but sometimes there will be specialists, including on committees or in the Senedd, that will say, "I want to get my teeth into that", and we're trying to find out where that balance is.' So, can I ask you if you did look at alternatives? So, for example, you mentioned that, I think, since 2011, the Welsh Government has utilised UK Government Bills on at least 13 occasions and so on. There is another choice that could be made, which is to bring forward legislation on those occasions, or on this particular one, rather than have an affirmative 'yes' or 'no' vote, to give more opportunity to actually amend by bringing forward a piece of legislation. So, I'm just interested in how you've come to the decision, because you say that the Senedd will get more say; it will get more say in 'yes' or 'no', as opposed to more say in, 'Ah, we think there's a tweak and an adjustment'. Do you see that?

I suppose it's a question about what's reasonable and proportionate. Would it be reasonable and proportionate to bring in a piece of primary legislation to delay the revaluation date by one year? Now, there's an argument to be had there, I suppose, but, you know, when you think about all the legislative programme that the Welsh Government has, it would be difficult to consider that a priority alongside the genuinely transformative kind of work that we would want to do, and, you know, there's a question for committees as to whether they feel that that would be the best use of their time as well. I can feel Debra wanting to come in on this.

Yes. I think, on the question, 'Were alternatives considered?', yes, for every one of the powers in the Bill, we considered whether powers on the face of the Bill would be more appropriate. So, there has been a process of determining, in the case of the things that are secondary-making powers, that it's more appropriate to do that. I think it's probably worth saying as well that in addition to those examples where we have used UK legislation in the past to change primary legislation, there have also been occasions where we have opted not to use UK primary legislation to make changes. It comes back to it being a very extensive and complex landscape, and those kinds of decisions have to go on all the time.

Okay. Thank you very much. Adam.

Just to remain on this topic of the 13 occasions that you referred to that you'd used Government Bills in order to make legislative changes, they were primary legislation, Bills, weren't they—by definition, that is? So, the UK Government was using these primary Bills, not using secondary or subordinate legislation to make those changes. Is that correct? Okay. So, would passing this Bill therefore mean that more delegated powers would be given to you as a Government, as compared to the UK Government in these same fields?

Can I ask you to take that?

I think it's difficult to give a single answer to that question because those 13 Acts have dealt with quite a wide variety of situations and in relation to both local taxes. The majority of those changes have been around quite specific areas of legislation, and I think it would be fair to say that the UK Government would also find it much more straightforward to be able to do some of those things via secondary legislation-making powers as well. I can only speculate on that.

But the question is—and perhaps they would find it more convenient—what is the situation at the moment. Does the UK Government tend to use primary law-making powers to make these changes in this field in general?

I would characterise the changes that they make as enabling powers, in much the same way that we are seeking powers in this Bill. So, just to give an example, one of the Acts where we used UK Government legislation was the Local Government Finance Act 2012, which created the powers to deliver a council tax reduction scheme, and took very similar powers to UK Government in that regard, where both legislatures provided for the development of those schemes through subordinate legislation. So, as I say, it's hard to give a single answer to the question in relation to every single power that UK Government has taken and those that Welsh Government has taken, but, broadly, I would say, the landscape in terms of powers for Ministers in Whitehall is similar to that which this Bill would offer.

That isn't the view that we hear, perhaps, from some of the experts that we've consulted on this issue, who emphasise the role of the legislature. I understand the suggestion that you've made, Minister, that there is still some element of a role for the legislature, but it's not the same role—certainly not in terms of the substance of the matter. Do you accept that there is a fundamental principle, when it comes down to taxation, which is different to other areas of consideration? It's in the US constitution, for example, that it's only congress that can decide on taxation. You can go back to 1689 and the revolution of that year and the emphasis then on the unique role of Parliament, the Senedd, in taxation issues, as opposed to every other kind of decision made. But do you think that you—? Do you believe that you have perhaps deviated from that principle in taking so many delegated powers?

No. I think that what we're proposing is consistent with what, as you say, is a very long-standing principle in relation to the role of the legislature. I don't see a contradiction there, especially as lots of what the Bill relates to are some of the practical things behind the system, such as dates of revaluations and cycles of revaluations and so on. Ultimately, of course, it's local authorities that actually set council tax, for example. So, I don't think that there is a disconnect between the role of the legislature and what we're proposing in this Bill.

Isn't there a different model? We've already heard reference to alternatives, but I remember, 20 years ago, when I was a Member of another Parliament, at every budget there would be a budget Bill tabled and we would vote on that legislation. For taxation of course, decisions were made within days if there was a need to change the primary framework for those taxes. Why can't we do things in an expedited way here, where needed?

Well, we know that the council tax and NDR systems will need to be updated frequently and will need to respond to things frequently. Does it feel right, then, to be using a kind of more emergency procedure to deal with things that we could reasonably anticipate in any case? I suppose that's a tension there.

But the question, Minister, is: the level of scrutiny that one has on the floor of the Senedd is going to be so much better in having that expedited Bill than one would have through regulations, to be honest. And, of course, we did see during the COVID period that we as a Senedd can work in that expedited way and can have that adequate, sufficient level of scrutiny of taxation changes that are of general importance to the public. They're going to impact everyone, or at least many people. That's why you need, at all times, if possible, that primary legislation that I suggested.

So, I think we would have to disagree in terms of needing primary legislation at all times, especially because some of the things that we're talking about, in terms of local government finance, are just almost routine, in some ways. So, the date of a revaluation, it might be set in legislation, but, for example, we had the pandemic—that meant that we wanted to delay a revaluation. So, would it be proportionate to bring forward primary legislation and everything that involves to delay the date of a revaluation by one year in response to a set of circumstances? So, I'm keen to—. You know, committee will have a view on whether that's proportionate or not.

But, in the explanatory memorandum, you note that significant changes to non-domestic rates relief usually do require primary legislation, so why not continue with that?

I'll ask Debra to come in on this.

I think, actually, if I come back to the previous question as well, the local taxes, I think one of things it's important to remember is that they are an integral part of the wider local government finance system. So, they are not like national taxes, for example, in the sense of they can't be amended without understanding that wider context of the local government finance system in which they operate. And I have to confess I've forgotten the question now.

Well, maybe we can move on, but I was just making the point that I was quoting your own explanatory memorandum back at you to give a counter example, because the Minister was saying, 'Look, there are some technical things that, really, we don't need to trouble the Senedd with in having primary legislation', but you make the point yourselves that substantial changes to NDR reliefs usually require primary legislation, and you're moving away from that convention, really, and it's quite an important constitutional principle, is the point I'm making.

I think it's just that in some cases they do, and in some cases they don't, so this legislation would make things more coherent. So, I mentioned previously, when you're dealing with charitable rates relief, that's set out in primary legislation, whereas small business rates relief, that's set out in secondary. So, at the moment, it's not a coherent landscape, and this attempts to bring some of that coherence to it.

Yes. I think the only other point I would add is that in many of the cases where primary legislation has been used, that has, in practical terms, necessitated the use of UK Government Bills. So, a lot of these things, in our experience, have needed to be done very quickly in response to some specific pressures or circumstances. So, whether the Senedd could deal with things at that pace, I guess, would be the question, rather than using that secondary legislation route, which would definitely allow that debate and decision to be made within the Senedd.

Alun.

Well, let's try it, is it? Let's try it, because the conversation, which I enjoyed listening to, between the Minister and Adam Price, is one we've had before, of course, around the Finance Committee's consistent recommendations that the Government make use of a finance Bill in order to set tax rates, and the Government's refusal to refuse on principle, but on practical grounds. I remember the Minister's predecessor thought the best time to introduce such a structure would be upon his retirement, which at least had the advantage of being honest in terms of replying. But it would be important, Minister, that the Government takes a wider and perhaps deeper view of these matters in seeking—. I agree with you that you need a coherent statute book and a coherent framework for the exercise of different powers—I accept all of that—but the power of raising tax is a particular power, and it's a power that should be exercised by the legislature and not simply the Government. And the example of both Scotland and Westminster in using finance Bills to use that power, I think is an example that the Welsh Government should follow sooner rather than later.

But, to my knowledge, neither of those use a finance Bill to deal with local government finance matters, because—

I think it's the principle of the balance of where the rightful powers of Government and the powers of the legislature rest. Finding that balance is the important part, and I would very much agree with the points that Adam Price has made in questioning you this afternoon, that the Government needs to be careful not to over-reach itself in taking powers that are rightly held by the legislature and not the Government. And it may be an opportunity, through this Bill, for the Government to review its position on these matters in terms of the use of finance Bills in the future.

So, I would say, though, in any case, if you were to have a finance Bill in the Senedd, in the context of that, which we described in the Wales tax Acts scrutiny, it would not be the right place, I think, to include decisions relating to local government finance, which are different because they have a structure that goes back 30 years, and it is a different kind of landscape. And also, we have to remember the important role of local government itself in terms of setting rates of council tax locally. So, were there to be a Bill, it would probably be something separate to the one that—

[Inaudible.] You've already referred to the fact that, on 13 occasions in Westminster, over the last decade and more, parliamentarians there have had the opportunity to scrutinise not just the secondary regulations but the primary legislation referring to non-domestic rates and council tax systems. So, I guess our in-principle point is: if it's good enough for them and it's good enough for Scotland, and they can find a way to marshal the resources to do it, why wouldn't we do it here, to enable that full discussion, then, with parliamentarians, which might amend the detail of the primary legislation? Is there an in-principle position opposed to this, or are you of an open mind on this, as we develop capacity here in the Senedd?

So, in terms of what you're describing, I would say that's not what happens in either Westminster or Scotland in the sense that those Ministers also rely on a whole suite of secondary powers in order to make the kinds of decisions that we are proposing to make through this particular Bill. And also, an annual Bill where you make all of these kinds of decisions wouldn't be appropriate, in any case, because it could delay us being able to respond to a new—so, I gave the Ukraine example, the contaminated blood example—way of responding to people who are in need of council tax support. But then also the anti-avoidance side of things as well—do you really want to be waiting potentially a whole year before you can start shutting down some of those schemes as well?

No, indeed, and I don't think that's the concepts that have been advocated here; it's more of an expedited way, in exactly the same way that they're expedited within Westminster. Because, on 13 occasions, we've relied on UK Bills where MPs, in effect, have been gifted the opportunity to scrutinise what we subsequently then bring down here and give the powers to you, under secondary regulation powers, for a 'yes' or 'no' answer. So, it's curious that it's been done up there for here. I think we're just flagging it; I don't think we can get much further on this now, but—

Just on this point, it'd be very, very helpful to the committee, I think, if you could furnish us your assessment that leads you to the conclusion that the secondary powers you're seeking in this Bill don't go significantly further than powers that are available to UK Ministers. I think it would be very, very helpful, so that we can have that comparison—in relation to local taxes; let's define it in those terms.

There we are. Brilliant. James, I'm going to come straight to you, because I think we've covered some areas on NDRs, and we can follow up in writing some. So, James.

Yes. I've only got one question, Chair, if that's okay. Would you anticipate any of the proposed powers in this Bill—for example, in relation to reliefs and exemptions—being used to amend existing powers of the Welsh Ministers in primary legislation?

Perhaps Ruth or Debra—. Who would be the best person to answer that?

Yes. I don't think we'd be looking to extend the scope of the powers, but there are some examples where you might find that, actually, powers of the Welsh Ministers are removed. There is a power—. I think the new paragraph 8C would be a power to amend some of the reliefs and exemptions. So, if you took out those reliefs, then you would find that you've also removed the Welsh Ministers' powers in relation to those reliefs as well.FootnoteLink

I've got just one final question here today. Does the Government consider that any of the provisions of the Bill require the consent of His Majesty the King or the Prince of Wales?

Yes, they do, and if you bear with me I can tell you which sections.

That would be great.

Ruth's already got her finger on the pulse.

We are expecting that His Majesty the King's consent would be sought in relation to non-domestic rates provisions concerning completion notices, which is section 7; the duty to notify, which is section 12; anti-avoidance, section 13; reliefs and exemptions, section 5; and the multiplier power, section 10. And in line with normal processes, we'd be expecting to seek this consent at the end of Stage 2, and that's the usual practice.FootnoteLink

Lovely. Diolch, Cadeirydd.

That's great. Thank you very much. Adam, it brings us quite neatly to you then.

Right.

Why do you want to take anti-avoidance powers in relation to non-domestic rate liability?

Two reasons, really, the first being, obviously, to protect the vast majority of people who pay their non-domestic rates appropriately under the correct sum, and so on. So, to be fair to those people, but then also to protect the important revenue that is raised through non-domestic rates to support local services as well. So, those are two key reasons, and, obviously, the aim then is to crack down on those who seek to avoid.

And why have you chosen not to define artificial avoidance arrangements on the face of the Bill, and instead you're leaving that to regulations?

So, that's because techniques to avoid tax are constantly evolving in ways that aren't possible to predict, and non-domestic rates are obviously no exception to that. So, it provides the appropriate level of flexibility, I think, to respond to specific avoidance schemes as and when they arise.

Would it be possible to at least define on the face of the Bill now on the basis of current understanding of the kinds of potential avoidance schemes, but then leave it up to regulations for the future as people devise new ways, because at least that would improve scrutiny, wouldn't it?

I think we have gone as far as we can on the face of the Bill in defining what might constitute artificial behaviours. It is all about striking a balance between defining things to such an extent that that then limits the utility of those provisions. I think one of the constant struggles with local government finance legislation is that the more that you define it, the more quickly it becomes out of date, and the anti-avoidance provisions, in particular, were an area where we went into great detail in terms of considering what was appropriate to put on the face of the Bill and what needed to be left to subsequent legislation.

If I might add, particularly in relation to the point about accessibility of the legislation, we have here quite a clear framework, hopefully, in defining the individual elements of what constitutes an artificial avoidance arrangement, so what is left is just the precise element of 'artificial', but even the powers here are limited, so that the Minister can’t just choose anything to be artificial. It’s got to be within the scope of section 63H(2), so the regulation could only specify an arrangement as being artificial if it falls within what’s described in that subsection (2). So, the intention here is to be very fair to ratepayers, to make sure it will be absolutely clear what behaviour is caught.

And I do think it's probably worth adding as well that, as you say, we did go into a great deal of detail on this. The provisions in this Bill actually go considerably further than equivalent provisions in other legislation, the most obvious comparison being the Scottish Parliament's general anti-avoidance rules. So, I'd certainly want to convey that this is not something that was taken lightly. It is prescribed in as much detail as seemed appropriate.

Do you want to say something about charitable rate relief and shutting down avoidance schemes?

To give an example around charitable rate relief, as a method of avoidance, for example, charitable relief is intended to support charities. One of the very prominent misuses of the system at the moment is around businesses that are not charities trying to access that relief, and there are all manner of ways in which they attempt to do that. Examples range from finding alternative uses for empty properties, for example, and claiming that they are charitable uses. It would be extremely difficult to try to prescribe all of those kinds of situations on the face of the Bill. It will be difficult to prescribe them on the face of regulations. I envisage, actually, that we will probably need to go through several iterations just to limit avoidance in that particular instance, let alone other situations that might arise.

And millions of pounds are lost to local authorities every year though the abuse of charitable rate relief.

Alun.

Can we look at section 17 and the powers contained therein? Could you explain to us, Minister, how you intend to use those powers?

So, this is in relation to civil penalties. So, it's important, obviously, that we're able to provide for civil penalties, and any of those proposals that we have will be subject to consultation. The Bill does specify a maximum penalty that could be imposed in the regulations, but there is power within the Bill to amend that, so that the Bill is futureproofed, if you like, to changes in the economy and so on, but at least it in the first instance gives certainty to taxpayers.

You're also taking powers to change the reference point for calculating council tax from band D. I was interested to understand how you would anticipate making use of the power and what impact you believe the use of that power would have.

Band D was set as the mid reference point for the eight-band system back in 1991, so depending on the decisions that are taken in respect of council tax in the future, it might be appropriate to have a different band letter-wise or number-wise, because it might be that the Welsh Government decides to have a larger number of bands. That's something that's a suggestion in our current consultation. So, really it's just about a practical response to allow a future band to be band 5 or band something else, which is coherent with whatever is decided in relation to the number of bands in future.

And the statement of policy intent refers to the Bill enabling in-year changes to council tax reduction schemes. I'm interested as to how you would see that happening in year.

So, again, I think that this is something that would allow us to respond to things such as support for families hosting people from Ukraine—so, those kinds of unforeseen circumstances where we would want to recognise people's ongoing eligibility for support, even if a change needed to be made.

And just for the public record, my assumption is that the Government will give an undertaking to consult before exercising those powers.

Yes. I think that the intention is that anything that involves changes to the support to which people are entitled, it would obviously be only right to consult on that.

Okay. I'm grateful.

Thank you very much. We have still got just a few minutes left, so we are going to try to get a little bit deeper into some of the ones—. We won't have to write to you then. Alun, did you want to take us into the general provisions as well?

I thought that the Minister had answered a lot of those questions through earlier questions.

Yes, indeed. Is there anything in particular that you want to pick up, in terms of the general provisions on, for example, whether there should be a duty to consult, Minister, before using any of the proposed reforms?

I think that we would abide by our usual public law duties. So, as opposed to having a duty on the face of the Bill to consult, we would consult as you would expect us to. Again, some of the changes that might need to be made are insignificant to people, if you like, but are important in terms of the maintenance of local government finance. So, I think that you have to be proportionate. But, as I mentioned, examples where people's eligibilities and entitlements would change would need to be consulted on.

Yes, okay, I want to pick up on one area, which is on the single person discount. You are replacing the single person discount in primary legislation with a power for Welsh Ministers to make regulations on this. Why are you doing that?

So, the single person discount is set out in law at the moment, but it is attached to, for example, empty properties relief. Perhaps I will ask one of the team to provide a little bit more detail on that, but what it does is—

I know that it's an issue that's worrying a few people.

It shouldn't. This is classic right-wing media, which has been whipping up a storm over the single person discount, and it's not going anywhere. It is going to be set out in legislation that there will be a single person discount, and we have been very clear that it won't be changed.

But why not put it in primary legislation, then? If you are not going change it via regulation, why not put it in primary legislation, and give everyone the reassurance—

So, it will be on the face of the Bill.

I think that there is, as the Minister said, quite a bit of misunderstanding about what is—

That's very generous. [Laughter.]

—being prescribed for. So, the Bill actually makes provision for the single person discount—or single discount, actually—to be retained. What the Bill does is create powers for a greater variety of discounts. At the moment, legislation allows there to be a single discount of 25 per cent, or a double discount of 50 per cent, and the double discount, unsurprisingly, has to be twice what the single discount is.

It would be possible—. I don't want to suggest that anyone is even considering this, but it would be possible to reduce the single discount under existing powers, but what that would do is adjust all of the other discounts to the same extent. What the Bill will enable is actually to create discounts at different levels—new discounts or amend other discounts—so that you are not tied to having just those two percentages.

I just wanted to clarify one thing. So, the single person discount will be on the face of the Bill. As the Minister just said, it will be there on the face of the Bill in primary legislation.

It is on the face of the Bill, yes.

Thank you very much. Adam.

This is a policy question, rather than a—. But seeing as we've gone in that direction—

Sneak it in. [Laughter.]

You can remind me, Minister: where are we in terms of charitable tax relief on private schools and hospitals in Wales? You had a consultation some years ago. What's the—? Does this Bill change your powers in that regard in any way?

So, that was one of the examples where you would have to have primary legislation to make changes. What this Bill would enable you to do would be to make changes through regulations, and it's still our intention to make some change in that space. But the Bill will give the power for it to happen, rather than effect the changes.

That's very helpful. Thank you.

There we are. Good. Well, Minister, thank you very much indeed, and your officials as well. We've covered quite a lot of ground there. It's been a fascinating discussion on some points of principle as well and some of the detail. We will need to follow up with some detail that we haven't quite got to, and probably there are some other questions that have arisen out of it, so we'll come back to you. But I think we've got the time to do that as well. So, thank you and your officials for your presence today and your answers. We're going to let you go now. And, with apologies to those people who are following us on Senedd.tv, and the poor people in the gallery who've just joined us as well, we're going to go into a very short break to allow you to disappear and to reassemble our tables here for the next part of our deliberations this afternoon. Thank you very much indeed.

Great. Diolch yn fawr.