Local Government and Housing Committee

Okay. Croeso nôl. Welcome back to a further evidence session on the Local Government and Finance (Wales) Bill. I'm very pleased to welcome, joining us here in the committee room, Jonathan Russell, chief executive officer of the Valuation Office Agency, and also Carolyn Bartlett, chief strategy and transformation officer for the agency. And joining us virtually is Carolyn Dawson, chief executive of the Valuation Tribunal for Wales. Welcome to you all and thank you for coming in to give evidence to committee this morning. Perhaps I might begin, then, with some questions on the general principles of the Bill, and firstly, very generally, whether you might outline your initial thoughts on the Bill's provisions and those general principles.

Good morning. It's good to be here.

In terms of the general principles, we have been working closely with the Welsh Government, so we're aware of what the main factors are going to be in the Bill. Those are the more frequent valuations, the information duty and the introduction of penalties. We have been working closely—. We're able to deal with those, we can manage that more frequent revaluation cycle, so we're confident that we'll be able to cope with and deal effectively with the requirements of the Bill. Indeed, our past track record demonstrates that we can do that, so it doesn't hold any concerns for us. In terms of the specifics, I think that's more for the Welsh Government to decide what they want to do and how they're going to go about it, and then we'll work with them, as we have done in the past, to make sure that we deliver it effectively. And always bearing in mind that, at the end of it, there is a customer, so that's going to be one of our key considerations—to make sure that we can deliver both for you and for the customers.

Okay. Thanks for that. Anything to add from our other witnesses?

No.

No. Okay. Let me just ask you, then, Jonathan, in terms of the VOA, there's going to be a significant system transformation project, and that's currently under way, which will create the potential for more opportunities for decisions to be made by the Welsh Government in relation to the valuation processes. Could you just, for committee, expand a little on that, please?

Yes. When you talk about valuation processes, I presume you mean the frequency of the revaluations. So, I think the valuations processes themselves, in terms of the work we do, won't change dramatically. I think it would be worth while just explaining to the committee a little bit what our responsibilities are. So, our responsibilities are to carry out independently valuations, be it for non-domestic properties or domestic properties, and those valuations then lead to the rateable value, which then leads to the bills being issued by local authorities. The valuation methods that lead to those will not change as a result of the Bill; we'll still use the three main processes of valuation, which are rental comparison, contractors, or receipts and expenditure. So, the work we actually do will not change. What will change will be the amount of evidence we are asking ratepayers to provide us. We already ask for a considerable amount of evidence. We just need a way of formalising that, and that will help with the more frequent revaluations. So, we get information from the ratepayers and that'll help us compile the evidence to then lead to the rate or value that we come to at the end of the valuation period.

I see. Okay. Thank you very much for that. To all our witnesses, then, could we just get your view in terms of the Welsh Government's draft budget, which states that allocations have been made to

'establish a sufficient funding baseline for both bodies in future years',

for the Valuation Office Agency and the Valuation Tribunal for Wales? Could you just tell us how that additional funding is likely to be used in the next financial year?

Yes, certainly. Again, we have a service level agreement with the Welsh Government, and that SLA is reviewed quarterly, so we do have a very close, robust and open working relationship with the Welsh Government, because, as you know, we set budgets and then things may change throughout the course of that budget. The current estimate for 2023-24 is £17 million. That's gone up because we're doing more work. I think, in 2021, it was about £8 million. Obviously, the more work we're doing, the budget will increase. Of the current budget of £17 million, about £11 million of that is on people, £2 million on tech and then £5 million specifically on the council tax revaluation you're doing. Going forward to 2024-25, we're not exactly certain yet, because we're still working through what the budget may be, but the estimate is it's likely to be in the region of £17 million as well.

And then, we also have done some budgeting thinking about what would happen in 2030, when the council tax revaluing becomes more frequent. So, specifically for the 2025 council tax, that's about £12.5 million, and then, if you go ahead for the 2030 revaluation, our estimation of that would be about £14 million. Then, on the NDR reform specifically over a 10-year period, we estimate that to be about £15 million or £1.5 million per year. But just to put that into some degree of context, I think the revenue that you get from council tax is about £2.6 billion, and our resource costs are about 0.6 per cent of that. But we think and we are confident we have enough resource to take forward the requirements that you're going to put in the Bill, but, obviously, we'll work with you to see if those requirements change. If we're not spending that, we'll send it back; if we need a bit more, we'll ask for a bit more. I think we sent some back this year because we slightly underspent, so we do keep a robust check on it.

Okay, Jonathan. Thanks very much. Carolyn.

For VTW, the majority of the uplift in our budget will go on staffing. We've been very low on staff for the last few years. We've cut our cloth to fit the budget. With the prospect of a council tax revaluation and also with this stream after check, challenge, appeal, with the appeal part, we obviously need to up our staffing levels to meet the workload. The biggest part of our budget will go on that. Also, training, because we're going to have new staff, and our clerks, unlike in other tribunals, are professional officers, so they will need to be trained. So, there'll be fees for IRRV and things like that. And then, obviously, because we're upping our staff, we're also going to be looking at the technology we use and probably replacing stuff that is now outdated. But we think this will allow us to service both lots of appeals.

Okay, Carolyn, thank you very much. We will move on to other committee members, then, and firstly, Sam Rowlands.

Thanks, Chair. Good morning, all. Thank you for joining us this morning. So, you touched on, in particular from the VOA side, the capacity that's going to be needed with more frequent revaluations. Could you expand a little bit further on the discussions that you have been having with the Welsh Government to understand what that capacity may need to look like, please?

Yes, certainly. So, in terms of the capacity we're using, we have our population of 3,500 in VOA, around 200-300 in Wales. We are, actually, going through a period of significant technological investment, so not just for the Welsh Government, but, more generally, we're looking at making sure we're modernising our IT so it is more effective, more efficient. So, we're doing that across the board.

And then, in terms of the council tax revaluation, we're using mass appraisal, which is an internationally recognised way of doing things. We have used it before and this is a way of actually, again, also speeding up the valuation process. Indeed, for the current council tax revaluation we’re proposing, we’ve already done the first round of valuation. We’re still planning for the second round to make sure we validate those valuations. So, a lot of it is about using new technology, making sure we’re working more efficiently, more effectively, and, of course, part of the requirement is getting the evidence in from ratepayers too. So, a lot of it’s about making sure that we’re using the evidence base from the ratepayers so we can quickly make those revaluations.

And in terms of what we’ve done in the past—and you are moving to three-year revaluations—the valuation we’ve just done is actually a three-year revaluation. So, we have done it before and we’re confident we can do it again. A lot of it is about making sure we get the tech right. We have massive numbers of—not massive; we have significant numbers—of surveyors, to make sure they’re qualified, professional. We have great staff—they’re committed, they’re professional. So, we’re confident we can do it.

It all sounds very positive, but there must be some risks or concerns you might have around delivering this, and, as you said you've done it recently, what kind of lessons have you learnt and what are the risks you think that you would have a level of worry about?

We're certainly excited by it. We’re an organisation that does valuation, so we love the opportunity to do valuations. It’s what people in the organisation do, and they're really looking forward to it. So, yes, we’re excited about it. There is definitely some risk with it. We actually think, to ensure the long-term sustainability of the whole rating system, you could argue a more frequent valuation allows people see what the rating is based on, based on more up-to-date evidence. We get more up-to-date evidence. We’re improving our tech, so there is risk there, but I don’t think there’s anything that we should be concerned about; it's just making sure we run the system properly. Carolyn’s a lot more close to some of the detail than I am, so I don’t know if she wants to come in.

I’d simply add that one of our challenges has been not having done a council tax revaluation for 20 years and the kind of level of relevance of the evidence that we hold on properties. So, we’ve undergone a really, really extensive data improvement exercise over the last year, making sure we’ve got the very latest evidence on Welsh properties and sales evidence of similar properties so that we’re really well placed to do that.

Okay, thanks. Perhaps, just to go a little bit further on this, as well, within the legislation, it allows the Minister or it proposes for the Minister to have some flexibility around the three-year frequency as well. Have you had conversations about your ability to gear up to those potential changes and how much notice period you would require to be able to undertake that work?

If you can look at the system as a whole, three years is quite a change for your ratepayers. And, yes, we can do our work—that’s what we do—but we're always considering that we need to make sure that we land it properly with the people who actually end up paying the bill. So, we have been having conversations about the significant change this will be. Yes, for us, three years is fine. We’d have conversations with the Welsh Government about the timing, but, as long as we have notice, we can change the dates slightly. But if you’re alluding to bringing them more frequently than three years, that would be a significant change. I think we’d have to work through quite a lot of detail about what that would mean both for us and, more importantly, for the ratepayer, especially if you consider the extension of the information duty et cetera, because, at the end of the day, we want people to be able to comply with the duty. We want people to understand the bill, how the bill’s been arrived at and have confidence in it. So, that would be our consideration when having discussions with you [correction: Welsh Government]. Obviously, at the end of the day, it’s a Welsh Government decision and we’d have to work with you around making sure you’re aware of the risks and also what we could possibly need to make sure it would work properly.

Yes, and just to go a bit further once again, we heard evidence earlier this morning from individuals who shared that the council tax revaluation moved to every five years, but that the legislation may allow Ministers to make that either longer or shorter, and perhaps the risk with that is that it becomes a political football, because clearly a revaluation of residential for council tax purposes can be a bit of a political minefield. I guess there’s a risk you could get caught in the middle of that if you’re planning for a five-year r­­­­evaluation but suddenly the Minister says, ‘Actually, we should extend that by a further year because, politically, it’s better for us.’ I guess you’d have to just react to whatever a Minister would want, in that case. Is that right?

Yes. Politics aren’t for us; we just do the valuation.

I think we're really well prepared to undertake a revaluation whenever the Welsh Government decides they want to go ahead.

Yes, all right. Thank you. And then, moving on, Carolyn, from the valuation tribunal position, in terms of trends in appeal volumes, with a new compliance regime, I was just wondering if perhaps you could help us understand what plans are in place if those cases did exceed your current expectations around appeals.

I think that's why we're concentrating this year on getting more staff in. As I said before, at the moment, we've been understaffed for the last couple of years. It's hard when you don’t know what’s going to happen with the rates of appeals. We’ve been monitoring the CCA in England to see what’s been happening there to try and see what rate of appeals they’ve been getting. They are lower than they expected, I think. But I believe there are a lot of proposals that are still in the challenge stage. So, I think the Valuation Tribunal for England are still expecting quite an influx. I think we’ve got time to prepare with CCA. It’s quite a lengthy process for appellants. So, that gives us time to get those staff trained. We’re not worried about the level of appeals that will come to us. We feel that we can handle it. We’re bringing in more staff, we’ll be concentrating on training during the year so that we’re ready to take on whatever comes our way.

Perhaps you could give us a bit more flavour as to what it is you expect with the way things are currently proposed.

It's very difficult as far as non-domestic rating is concerned to know what the level of appeals is going to be. We don't expect the same level as we've seen in previous times when we've had revaluations, but we do expect that any appeals that come our way will have to go to substantive hearing in order to clear them, which means that we'll probably have some more listings, but we will have long days at tribunal. It's really hard to know with non-domestic rating—it's an unknown for us. We've never had CCA before, we've never been through this process, and we've never had appeals directly for a long time for non-domestic rating appeals. So, it's a bit of an unknown. I don't know that I can say much more, really.

I guess what we're trying to understand is the level of confidence that we could have that you'll be geared up to handle those potential increases. You said at the start that you recognise that you're going to have to increase your staffing to react to this, so you must have, I guess, some sort of idea of what sort of level that would be to.

It's a good question. I'm not 100 per cent sure. To be honest, I think we'll get more appeals from the council tax revaluation. I don't think we'll see many appeals in the next year from non-domestic rating, unless they're hardship. I think the numbers will be fairly low. I think we're looking in the hundreds over the next year, not thousands.

That's fine. Thank you very much. Chair, I think I'm fine now.

Thank you, Sam. We'll move on to Carolyn Thomas.

I'll be asking questions regarding charitable rate relief and artificial NDR avoidance. But before asking that question, when you're looking at valuing a property, I assume it's based on the size of the property, but with climate change and many properties at risk of flooding, maybe subsidence, landslide and all this happening—flooding, mainly—these days, would that be taken into consideration, do you think, when valuing the property?

The valuation of a property is done on several factors—it's not just the size. It depends whether it's a non-domestic or domestic valuation. One of the things that we do look at is the tone—what is the tone of the environment. The best thing we can do is to have comparables and evidence around that. For example, if a house down the street has just sold for x, then does that set the tone for the rest of the immediate vicinity? But also things like schools, hospitals, pharmacies—all these sorts of things play into it. So, it's not just as simple as saying, 'This house sold for this'. We look at a range of data, and that's what the mass appraisal system is doing as well—it's taking a collective view of what is the tone of the area, what influences how much people will pay and what the price is for those domestic dwellings. And then, on NDR, it's different—it depends on what the property is, but all those factors will be considered, so it's evidence based. The best way of setting a non-domestic rating is you have a property that is rented out on the day of the antecedent valuation date and that then sets the tone for that area. So, we make it as evidence based as we possibly can. We don't set the market, we just reflect it. So, if there is an issue with an area where flooding may have been an issue, we'll reflect that, because that's what the market has determined.

I didn't know all that; I don't know if other committee members knew. But I just think that, if we're looking at going forward with revaluation, people need to know, don't they, really, beforehand what it's all based on. So, it's very important.

Yes, and that is something we are taking incredibly seriously. We want to be as transparent as we can be. We've just done the latest non-domestic revaluation and, as part of our proactive approach to that, because we're doing it very quickly, we went out and let people know how we value all sorts of properties so that people would understand the valuation methodology we use to get to their rates bill. So, we're very much aware that, if we do that, people have more confidence in the system, and that will lead to probably fewer checks, challenges and appeals as well, because people understand it.

I was thinking that, yes. Thank you for that.

That's fine. But if you want to spend a day in our Cardiff office to learn more, you're more than welcome.

Thank you. I'd like to ask if you have a view on the provisions relating to charitable rate relief and the Government's new powers regarding artificial anti-avoidance arrangements and any practical issues that this might bring.

It would be worthwhile just setting out a little bit about what the agency isn't responsible for. We are responsible for the valuations, but we don't have a policy remit or a policy responsibility. We don't have a responsibility for setting bills, collecting bills or taking payments. So, policy decisions around what's a charity and what isn't a charity aren't for us, really, they're for the Welsh Government to set in legislation. We will then, if necessary, do the valuations and others will set the bills, et cetera. So, we don't have any responsibility for that.

Okay. And the appeals process, then, regarding tackling artificial avoidance arrangements. So, the appeals process, would that be with you then, or do you think that would be—

No. Carolyn can say a bit more about that.

She shook her head.

I think it would be the other Carolyn.

The other Carolyn. I've never been in a meeting with three Carolyns before. [Laughter.]

As far as VTW is concerned, we're quite happy to welcome a new stream of appeal. It's not something that we've dealt with before, but looking at the regulations within the Bill, I can see that it's set out well and the responsibilities of the tribunal are clear. We can either confirm the notice or require it to be withdrawn. It's a very simple stream of appeal. And, obviously, the amount of appeals that we get from this will very much depend on how many section 63K notices are served by either the billing authority or Welsh Government Ministers. But we don't foresee that it would cause a big problem for us. We think the numbers will be limited. Obviously, I'm sure billing authorities and Welsh Ministers will be looking to help the appellants, so that should make our life easy.

Okay, Carolyn?

Yes. Thank you.

Thank you very much. Jayne.

Diolch, Cadeirydd. Good morning, everybody. Just following on around some of the information for ratepayers, how do you think the new provision might change how ratepayers engage with the Valuation Office Agency? Do you think there'll be an additional burden on ratepayers?

Thank you. In terms of how they'll engage with the Valuation Office Agency, we like engagement, we want people to be looking at the guidance we produce, interacting with the social media and communication channels we provide, because again we want people to understand how we reach the valuations so that they can have confidence in them. So, the more interaction we have in that sense, the better. We want to make sure that the information requirement is simple and easy to comply with, because at the end of the day, we don't want a lot of information coming through into the agency that isn't correct, and also we want to make sure that we're not putting a burden on businesses.

I know Carolyn has done a lot of work in terms of the impact assessment and what we think that might be. It's probably worthwhile just saying that the requirement isn't particularly new. We already ask for a lot of information to gather evidence about setting the valuations. I think we asked for 0.5 million pieces of information last year, for the valuation we did recently. So, it's nothing new, it's just formalising it, but we do want to make it easy for people to comply with it. Do you want to add anything more to that, Carolyn?

No, only to say that we're absolutely committed to making it really easy, straightforward and simple for our customers to give us that information, and we're building an online service to make sure that that's the case. And we're doing lots of user research and user testing to make sure it meets our customers' needs.

I was just going to ask you about what sort of guidance is going to be prepared and published for ratepayers.

We're very much hoping to develop a system that makes extensive guidance unnecessary. The idea very much is that people can sign up online and then follow the step-by-step processes in our service. So, we're hoping you won't need to get to grips with lots and lots of printed guidance. We will make guidance available ahead of launching the service, absolutely, so that people can familiarise themselves if they want to, but, as I say, very much our aspiration is to make it unnecessary for people to need lots of guidance because they can go online, sign up for an account and just follow the simple step-by-step step processes on that.

Jayne, just before you go on—. Will there be additional requirements for those who receive 100 per cent rate relief in terms of information provision and what is to come compared to what we have now?

They will have exactly the same requirements as anyone else, there won't be extra requirements. It is worth noting, as Jonathan said, we already ask our customers for a lot of information. We will be sending out over 0.5 million requests for information this year and about 60 per cent of that goes to customers who don't pay business rates. It is really important to us in terms of how we do a revaluation that we have to value every single property whether they pay business rates or not. It's really important that we get that information in. And, of course, having accurate information can determine whether you pay business rates or not, whether you are over or under that threshold. So, it's really important to us to get the comprehensive information from all our customers so that we can do accurate and fair valuations.

In general terms as well, we touched in our earlier evidence session on those that are not digitally enabled in whatever way and what would be required of them in terms of information provision, documentation and how onerous that might or might not be. What would you say to those sorts of concerns?

We will absolutely be making sure that there's a route for people who are not online to give us information. We actually already have quite extensive assisted processes for people who don't have online access, so it would be an expansion of those and plenty of support through our customer service centres. We've developed seven different user personas for developing the service, and one of those is an assisted route for people who don't have online access. So, we'll be making sure that we meet their needs as we develop the service, very much so.

Thank you very much. Jayne.

Just on that point, what about those who have English as a second language? Do you do a lot to try to make sure they're aware of the situation?

Yes, definitely. We've got one of our customer service centres actually based in Cardiff and we have a dedicated Welsh language line for people whose first language is Welsh. Our Welsh language scheme was updated in 2023 and it was approved by the Welsh Language Commissioner. We've actually set in train a scheme to review it in four years' time. But obviously, if evidence proves that that's not quite right, we'll revisit it too, because we're absolutely committed to making sure that people can deal with us in the language they feel most comfortable with.

And just in terms of other countries, people who come with different languages as well, I know it's difficult for every language, but how are you trying to make things easy so that people are able to understand?

We do have access to translation services should we need it. We do concentrate on the main languages—obviously, that's English and Welsh—but we do make sure we're as open as we can be to people whatever language they use. Because at the end of the day, we want people to be able to comply with the system and not feel they want to evade it because they just don't understand it or can't interact with it.

Absolutely. Thank you. And just finally from me—this is really for the valuation office—what would be the bar for determining whether to impose civil penalties on ratepayers for failure to provide the required information under the new duty, and how will you engage with the Welsh Government to monitor the administration of the regime?

We have a really close working relationship with the Welsh Government as it is, and we imagine a continuation of that. We have a service level agreement agreed yearly and we meet quarterly to monitor how that's going. We have various other committees as well where representatives from the Welsh Government sit and provide information, advice and guidance to us. But, as I said, we don't want people to fall foul of the regime. We want people to be able to comply with it.

In terms of setting the bar, I'm not quite sure how that would work in practice. At the moment, it's very light touch and we wouldn't see that changing, because most people want to comply. If you look at the overall evidence in terms of appeals, for example, on the last list—the 2005 list—I think it was something like 3.9 per cent. So, even where people have some disagreement with the bill, it's quite small, quite low. I think, last year, we had something like 57 complaints, so most people can comply if they do want to comply with it. I don't know if Carolyn wants to say any more about how we work on the penalty regime, but overall the principle is that we don't want to be applying penalties. It's far better that people understand it and comply with it.

I was just going to say something very similar. Our priority on this is absolutely getting it right for our customers, making it straightforward and easy for them to comply, so penalties, for us, are very much a last resort and would reflect deliberate and repeated non-compliance. And before we issue any penalties, there will be a series of reminders and prompts and warnings, so people will have every opportunity to provide us with the information and we'll work with them to make that easy for them. There will be a right to request an extension to provide that information, a review, and ultimately a right of appeal, and you might want to talk to the other Carolyn about that.

We actually do already have the power to issue penalties, and we issue very low volumes—I think there were 77 in Wales last year. So, we will have discretion in the way we operate the regime. I hope the way we operate our current penalty shows that we are very proportionate in the way we do that, and absolutely our priority is getting it right for our customers and making it easy for them to provide the information we ask for.

Thank you very much.

Diolch, Gadeirydd.

Would the other Carolyn like to come in and say anything at this stage?

On penalty notices, we've had very few appeals on penalty notices, which I think shows that the VOA handles them well, and any that have come to tribunal—. I would say, in the last three years, we've had maybe two penalty notice appeals, which have never come to a substantive hearing. Normally, once we register them, we'll inform the Valuation Office Agency that they're there, and then they get in touch with the appellants and they seem to be able to settle them without having to come to tribunal. So, I would say that, if they continue with the past experience we've had, the appeal levels should be very low.

Okay, Carolyn. Thank you very much. Okay, thank you, Jayne. Joel James then.

Thank you, Chair, and thanks ever so much for coming in this morning. I've only really got the one question, and it's for the VOA again. You touched upon it earlier in the discussion about that budget flexibility you have, and that you have sent money back, and I just wanted to get an idea of the Welsh Government's recent assessment of the cost or the budgetary costs that will come. I think it's anywhere between £12 million and £15 million, and I was just wondering whether or not you thought that was an adequate settlement figure, and if you could see situations where you might need more, if that makes sense. There might be a situation where it's, 'Hang on, this year we need substantially more,' you know.

I think the budget is robust. It's based on the best available evidence we have, looking at the past, what we think, for example, the appeal rate might be. So, I think it's as robust as it can be. If we require more, it may be if the requirements from the Welsh Government change slightly, for example in doing more frequent revaluation itself, we're doing more work, so that will cost more. We'll have to look at what the actual impact of the NDR reforms are. We've costed that at £1.5 million a year over 10 years. Again, we think that's robust, with the available evidence we have at the moment. With any new system, we need to keep it under review, and one of the key things we need to be sure of is that there are no surprises, so that's one of the reasons we're very keen to keep the dialogue going with Welsh Government, to make sure that, if anything does change, you know about it, we know about it, and we can come to a solution together, because this is going to work by us, with the ratepayers work and then agents and other interested stakeholders working in partnership. It's not something that we do to people; it's something that we try and do together in partnership. So, it's robust at the moment based on the evidence we have. Hopefully, it may cost slightly less. We don't know. But if it does cost more, we'll be in conversation with you and let the Welsh Government know.

Okay, brilliant—thank you. That's all, Chair.

Okay, Joel. And Luke—Luke Fletcher.

Diolch, Gadeirydd. Just thinking around the procedure on the valuation lists, I was just wondering if you'd be able to outline some of the potential benefits and disadvantages of the provision within the Bill around five-yearly cycles of revaluations.

For us, the benefits are that we get used to doing revaluations. It's something we do. It's good to have that predictability, that certainty, that consistency. It'll mean that the evidence is up to date, so, if it's done every five years, it'll allow us to get into a programme of actually making sure we know what we're doing at certain times. There would be the evidence-collecting period, and the valuation period, and producing the draft list. So, it provides certainty into the system, I think, in terms of, when we're dealing with ratepayers, the valuation date is more relevant, so, again, they'll see how it reflects the current economic circumstances. The longer you go between valuations, the economic circumstances can change, and people may think that doesn't, then, reflect their experience as a ratepayer in terms of their business valuation.

So, would you say there's any disadvantages to doing it as well?

From our point and perspective as a valuation agency, no. It provides that consistency, that certainty. It allows us to do things, for example, like recruitment, getting surveyors in, using data. So, no, nothing from our perspective.

Okay. If I can come to Carolyn—and it's the Carolyn on the tv—just thinking from the perspective of the Valuation Tribunal for Wales, I imagine that you would anticipate that there would be more challenges in the early stages of any new valuation cycle, especially considering how long it's been since the last valuations were done. Am I right in saying that you would anticipate that?

For non-domestic rating now, yes?

No, for council tax.

Can you just repeat the question? Sorry.

So, I imagine you would anticipate that you would have more challenges to valuations—

Yes.

—around that. And so what would you anticipate that would need to be done, then, to meet some of those challenges?

Obviously, when the new list comes in for council tax, yes, we would expect a huge uplift, depending on where the market sits, really. I think, with council tax, a lot of it depends on what people are seeing. So, if there's a fall in property prices just before the valuation list comes into force, people tend to forget that revaluations were done at AVD, which, in this case, if it goes ahead next year, would be 1 April, 2023. So, they forget that the valuation was actually done then, and if there's a significant drop between the value of their property at that date and then, obviously, they're going to feel really aggrieved. So, I think we'd be looking at a higher level of appeals in those circumstances. However, if the market goes the other way and the property prices rise—which happened in the last list—I think people keep quiet about the fact that they think their banding isn't quite right, because they feel that they're winning. That's the losing situation.

And, obviously, we've had an economic issue in this country over the last few years, and people are very conscious of where their money's going. So, if they feel that they're paying a higher price than they should, then they're going to appeal. People have far more access to information online about property prices, and they feel that they know that the valuation office is incorrect in its assessment of their property, and therefore they're more likely to put them in, because they feel they can come and prove that point at a tribunal.

With more regular revaluations, I suppose it does provide more of an opportunity for regular public engagement around what's going on. So, how, then, do we, essentially, ensure that people, firstly, are aware that revaluation has taken place, and, then, also, how do you then engage those people in the process and walk them through it? I'm wondering if there's any thoughts on that.

Yes. I think it's a partnership approach. The Welsh Government decides when the valuation takes place, and we are preparing for that now. When that decision's made, there's the Welsh Government responsibility in saying, 'This is what you're doing, this is why you're doing it', and there's our responsibility to make sure people understand, for example, how we go about and set the valuation. We want to be very proactive in that, because, if people understand it, and understand the property attributes we use to determine valuation, they'll have more confidence in the system. And we want to share as much data as we're allowed to with that. And we will also be producing draft lists, so people will be see, 'Well, this is what we think the valuation is' before—. So, there's the draft list stage and the compiled list stage. So, in the draft list stage, people will be able to look at the factual information we hold and see if, factually, the information is correct or not. If it's not, they can say, 'You need to change it: we've got four bedrooms, rather than seven', or something, so we can change that. So, it's about being as transparent as we possibly can in terms of the valuation process, then the purpose in doing it, that lies with the Welsh Government and others.

Okay. I'm not sure if anyone else wanted to come in before I hand back to the Chair.

I don't think so, only to say we've got lots and lots of experience of doing really quite extensive communications campaigns with our customers, so we definitely plan to do that in this circumstance.

Okay, great. Diolch yn fawr.

Okay. Diolch, Luke. Are there any other questions from committee members? No. In that case, then, thank you all very much, all three of you, for giving evidence to committee this morning. You will be sent a transcript to check for factual accuracy. Diolch yn fawr.

Okay. At this stage, I wonder, under Standing Order 17.42, if committee might approve us going into private session at this stage, and also for item 8, when we will also be considering evidence that we've heard today. So, at this stage, we could consider the evidence that we've heard up to this point, and then we'll go into private session for item 8 to consider further evidence at that point. Is committee content to do so? Yes. We will move to private session, then. Thank you very much.

Welcome back, committee members, to our further evidence session on the Local Government Finance (Wales) Bill, with local government witnesses. Thank you, all, very much for coming in, either physically or virtually, to give evidence to committee today. So, we have, joining us here in the committee room, Lisa Hayward, finance policy officer for the Welsh Local Government Association; we have Matthew Phillips, head of service, revenues and benefits, Rhondda Cynon Taf County Borough Council; and Councillor Susan Morgan, WLGA finance cabinet member. And joining us virtually is Councillor Robin Williams, WLGA finance cabinet member. So, welcome to you all. Perhaps I might begin with a general question, then, on the general principles of the Bill—whether you would share with committee your thoughts on the Bill's provisions, and whether you agree with the Welsh Government statement that the Bill will,

'further expand the Welsh Government's and local government's capabilities to deliver the fairest possible arrangements within the context of the established non-domestic rates and council tax systems.'

Who would like to offer an initial view?

Go on, then, I'll start. Good morning.

Good morning.

Just to confirm that we think the Bill enables the taxation system to be more responsive. A new and specific Bill for Wales is needed. It reflects the ability that we can change local taxation, as needed, as we develop, better suiting current society. We know the previous Local Government Finance Act 1992 came out on the back of the community charge and the introduction of council tax, and it has been changed on a number of occasions since, so the legislation is quite unwieldy. We feel that a specific Wales Bill will help us to move forward to address issues within the non-domestic rates and council tax systems.

Okay, Lisa, thank you very much. Do any of our witnesses want to add anything to that, or are you all content with that?

Nothing further to add, thank you.

Okay. Thank you very much, then. We will move on to other committee members and, first of all, Sam Rowlands.

Thank you, Chair, and good morning, everybody, and thank you for taking the time to be with us here today. I'm just interested in—the capacity within local authorities at the moment is very stretched, I guess, and the particular financial context that you're facing, as local authorities, is very challenging, to say the least—what capacity you might have available currently to undertake additional work, especially with the three-yearly revaluations lined up for non-domestic properties, and how you will meet that challenge of that extra work.

I'll start by saying, in general, that we accept that it will bring additional work, and capacity and resource issues are a concern at the moment, particularly in light of local government funding and a slightly uncertain future, but local authorities have always delivered. We've got an excellent track record in delivering to support our society. But I will hand to Matthew, from a local government perspective for experience of recent non-domestic rates revaluation and what that actually impacts on at a local level.

Thank you, Lisa. Certainly, from my experience of past revaluations, it doesn't ordinarily generate a significant amount of work from a local authority perspective, or it hasn't in my experience. Obviously, the more frequent those revaluations, then the more the likelihood for more work to be generated, but I don't think that's something that would be overly burdensome for local authority teams, despite pressures of work and future funding arrangements. The potential, I guess, for more regular revaluations is that it could reduce levels of appeals against rateable values, provided the information that is provided by ratepayers and the Valuation Office Agency is accurate and reflects market rental values, et cetera. So, I wouldn't be overly concerned by that, although I accept that it would generate more work.

I don't know if anybody else wants to comment at all. Susan.

I'd just like to take the opportunity to say that my experience of council staff in Torfaen, at the very least, is that where there are benefits to the community, where there are challenges that our communities are facing and they have an opportunity to step up to the mark to improve lives by good communication and plenty of support, they've got an excellent track record in so doing.

Okay. Thank you. And Robin's got his hand up as well.

Yes. Okay. Robin.

Yes, thank you. I suppose, from my perspective, I'd echo what's been said by my colleagues, but I guess my question and my thought process is where do the challenges lie and whether there would be challenges in capacity within the valuation office, for example, to carry out the reviews that are going to be required on the non-domestic rates and on the council tax changes, going forward, if the proposals are adopted.

That's a really good point, and we were able to have the VOA with us earlier, as a committee, today, and it was exactly the types of points that Robin was raising there. Just going back to, perhaps, the point Matthew raised around acknowledging that there's likely to be an increase in terms of work for local authorities here, it might not be for you to answer, but perhaps give us a flavour of the types of things you're doing to prepare for that additional work. Are budget lines being acknowledged in that sense—so, budgets agreed in local authorities, are they being slightly adjusted to allow for greater capacity within departments like yours?

Generally, no, I would say; it's a matter of absorbing what comes our way with the resources that we have. I would say that we're tried and tested in that regard in terms of revaluation exercises previously. We have systems and teams that have a heritage of dealing with the additional work that comes through from a revaluation, and, generally, there's a spike in work at any point in revaluation. It tends to occur at the same point that we issue the rating bills that are sent out at the same time. So, I guess we would resource up at that point until business settles down, and then it would just generally become a day-to-day administrative issue.

Yes. Anybody else want to comment on that at all?

I'd support that, if I can, to say that, particularly on non-domestic rates, when there was a revaluation effected last year, April 2023, it does become pretty much business as usual. You kind of know when your peak period is going to be, and it's not necessarily when the new rateable values are known; it's once the bill hits the mat, which always coincides with council tax billing. So, you resource up. You prepare your contact centres and your telephony staff for that. So, it's something local authorities do year on year anyway. It's accepted that, with the revaluation, there is always a peak because of the potential for appeal, but no-one has the ability at the moment to forward plan resource; it tends to be more reactive. But issues like that are pretty much, in the revenues world, business as usual.

And do you think there's more that could be done, perhaps, with the VOA or some body to help communicate that message before those bills do land, because I always find it's a slightly strange thing that the councils often get it in the neck for non-domestic rates, but clearly they're just collecting on behalf of the Welsh Government; they're not setting the rates themselves, or anything like that. So, is there a piece of work that you think could be done that helps communicate these changes, or just the message more generally, so things can be dealt with before those bills land?

I'd agree with those observations. I think the valuation office have, in previous revaluations—I seem to recall them doing it last year—prepared a suite of assets that we could use on social media platforms and the council website to try and promote that message ahead of any billing exercise. I've no evidence that that works, but I know that it was done. I guess, from a local authority's perspective, having reflected back on the exercise last year, I must say I can't recall that there was any particular surge in enquiries around the revaluation of properties, certainly nothing that warranted additional resource being pushed into a particular area. Whether that was down to the marketing or the publicity that the VOA made available, I can’t comment, but I know that they did work to try and do some of that upfront communication last year.

I don't know whether it's something for council members to consider as well, but just that point, generally, where, because the letters come from the local authority collecting the cash, it's councils and councillors who are assumed to be setting that rate and being responsible for the rates of non-domestic taxation. Do you think there's anything that could be done to improve that communication or message that you're just there to collect it on the Government's behalf? Or am I just barking up the wrong tree?

I think effective co-ordination of the communication across the partner bodies involved in changes is really important. That's always something that can be improved, in my experience, and local authorities are part of that mix. But where changes are made at the Welsh Government level, or where responsibilities sit with the valuation office, you'd expect co-ordinated communication.

Yes. Okay. Thanks. And then, perhaps, if I may just go a little bit further, Chair.

Sure.

The Bill we're considering looks to give Welsh Ministers powers to amend regulations in future to enable shorter revaluation cycles. I just wonder how you think that may impact on the ratepayers you support.

We think further powers to change a revaluation year give us flexibility to respond to situations that can happen locally and regionally. Naturally, it takes the reliance away from having to be part of a UK Government Bill. We noted from previous evidence that the business sector is supportive of regular revaluations. However, we have to be, from the local government perspective, mindful of the effect on the ratepayers themselves, and the impacts of significant changes, whether positive or negative. On the whole, we are supportive of more regular revaluations in general, but I think the ability to shorten the timescale is something that is well worthy of consideration and inclusion, because if you’re getting to that regular process of revaluations, you can actually, hopefully, remove the need for complex transitional relief schemes, because they play a vital part whenever you do a revaluation but they are quite cumbersome to administer, and not necessarily easy for taxpayers themselves to understand, either. It makes billing even more complicated and a little bit onerous. So, we think the timing could be—. If you’ve got a period of absolute certain economic stability, why would you want to technically go through the process for a Bill to be of negligible difference? I’ll ask my local authority colleague to support on that one as well.

Yes, I'd agree with that. I think more regular revaluations would be welcome. The opportunity to amend future dates, certainly, operationally would make more sense than what we have now, I think, to have that in place. As Lisa alluded to there, the greater the gap between revaluations, then the complexity with transition doesn't help. That is probably when we get more enquiries in relation to the bill that we send out. There are so many lines on there about the increases being staggered, et cetera, over a number of years. So, to be able to remove those kinds of relief schemes would help.

I think that you mentioned, obviously, the impact on ratepayers. We have representatives from the Federation of Small Businesses and others coming in after you. What sorts of things do you think that they might say to this, and what might their concerns be with the higher frequency?

I think that they would probably be concerned about the impact on businesses that are seeing quite a significant change to their operating model and their financial viability. It's a difficult one because you can see the need for regular change to reflect the market, but also, if it's too regular it can make it unstable as well.

I think that the system that we have had in the past does provide certainty and stability, accepting then that when properties and businesses have gone through a period of turbulence, they are having to wait and be picked up at the next revaluation. So, I'm not really sure exactly what their direct view would be for small businesses, but naturally, they seem to be more subject to minor shocks in the economic situation than a larger company. The change of the high street reflects that.

Yes, okay. Obviously, those questions would be for them. I was just trying to get ourselves warmed up for the next session as well. Perhaps one final question, Chair—is that okay?

Yes. Sure, Sam.

Going back to the point around the pressures on you as local government, which may require that larger capacity, could you perhaps give us a flavour of the types of discussions that you have been having with Welsh Government in terms of additional funding to enable you to have that capacity, rather than it perhaps all being absorbed within current budgets?

There have been discussions through the formal route in respect of the impact assessment associated with the Bill, moving forward. But, I guess that, from what I'm aware, nothing specifically has taken place for what that actually means for a revenues department on the ground, what that impact is, where the peaks and troughs are, where you need the extra cost pressures to be supported. From a local authority perspective, as we said, it's something that we kind of manage.

We have an eye on the fact that regular revaluations will incur additional costs. Also, there's the additional cost in respect of the operating systems that the local authorities all use, which are provided by private software companies. So, we have to be aware that there are costs there that will need to be covered to make sure that this is successful, moving forward. We've had headline general discussions, but not actually detailed, specific discussions of what it means, right down to the granular detail, across authorities.

Of course, the Welsh Government have made an estimate as to how much it would cost. I think that's based on a return of six local authorities out of the 22, in terms of the survey. So, I just wonder how confident you would be that the Welsh Government have a handle as to the resource implications.

I think that, at the moment, because of the situation on budget funding, every department would be responding to say that they are underfunded and that they need the additional resource at the moment. But in respect of this, we know that, whenever we have a revaluation, or any change to any taxation system, we've got to factor in the extra cost from the software suppliers as well. So, it's something that is, to a degree, out of your control, but you have no option other than to fund from whichever resource that you can.

So, we accept that, as we move this forward, there needs to be more understanding of the cost that a local authority has to incur to deliver. Hopefully, we can get to an arrangement where there are regular funding discussions, particularly around the software side of it, moving forward, because we cannot deliver regulations without that.

Absolutely. Okay. Anybody else want to comment? No? Okay. Thanks, Chair.

Okay, Sam. Thank you very much. Carolyn Thomas.

Okay. I'd like to ask some questions regarding conferring, varying or withdrawing reliefs and exemptions. What impact would that have on you as local authorities, on your resources?

Also, changes to charitable rate relief. So, charities are being asked to provide more information to have that rate relief—providing bank statements, et cetera. So, the impact that that would have on you, really, having to work with charities, maybe. Some charities are very small bodies, and they might struggle to provide that information straight away. There could be unused buildings at that time. I remember that, during COVID, there were unused buildings, and then they have changed again. So, really, the impact of that for you.

I will deal with some of that. Certainly, if there were additional reliefs to be introduced, then we would expect the Welsh Government to provide some funding towards that. I think that, from an operational point of view, we'd want any changes to reliefs or exemptions to be effective. It's important that they meet the requirements, that they're easily understood by ratepayers and authorities in terms of implementing those changes.

Where possible, automatic awards of relief would be welcome. We've seen that work before with small business rates relief and retail, leisure and hospitality relief. What's happened recently, over recent years, due to the legislative changes that have been made to both those reliefs, we now require an application form from ratepayers because of the limits that have been imposed, and that's created new administrative workloads for local authority teams and costs. And some of those are cumbersome and ineffective, and, I suppose, more importantly, they've reduced take-up in some instances for those reliefs, and that means eligible businesses missing out on the kinds of relief that they should be entitled to. So, we'd want those schemes, if possible—or where possible—to be some kind of automatic award, if they could be.

There's also consideration, I guess, of making some business properties exempt from rates, if that's possible, rather than introducing short-term reliefs. A more permanent form of exemption would be better, and the expense of the administration and operating cost, again, to be met in the usual manner. We talked about software changes there; they're always important and key. Any development that needs to be done to the operating systems generally comes at a cost, so we'd need to factor that in.

In terms of charities, I certainly think that the guidance—. The question here mentions the guidance, that would be helpful—to have some kind of Welsh Government guidance on that, and how we administer it and operate it. That would bring consistency and help develop a best practice approach. At the moment, where we have unoccupied buildings, and there's the potential for them to be used in the future for charitable purposes, that's difficult to police, it's difficult to dispute. I suppose, for context, in Rhondda Cynon Taf, currently we've got eight properties, unoccupied properties, that we are allowing the exemption for. In terms of monitoring that, we generally ask one of our officers to visit it to confirm whether it's empty or occupied, and we ask for very little evidence, because it's that difficult; it's just a statement of intent, really, from the charitable body. So, I think the provision of annual reports and accounts, at least, would demonstrate some assurance that the charity is active and that it has the proper governance arrangements in place. And it does place the onus on the charity to provide the paperwork, which clearly helps, and would potentially deter some charities from making false claims.

So, guidance is really important for consistency then.

I think so. And Welsh Government have done that for other relief schemes that have been introduced recently, such as the retail, leisure and hospitality scheme. They've provided guidance to go with that, which certainly helps.

Okay. Is it Robert online? I've forgotten his name, sorry.

Robin.

Robin. Robin wanted to come in, I think, as well.

No, I'm actually in a room where there's a glass window opposite me and I was waving at somebody as they were going past. So, apologies. [Laughter.] Force of habit.

Okay. Susan, would you like to come in? [Laughter.]

I'm not waving at anyone, just to be clear. I just wanted to emphasise the importance of the transitional arrangements and of where a relief might be withdrawn, that transitional arrangements will be key, as will, again, that degree of understanding and support that our teams are famous for giving in the instance where there's change. So, I think, allowing for that period of transition, ensuring that it's properly resourced and that it's not underestimated in terms of its challenges. It takes many years for people to get used to a system, and when it changes, it can take some time for them to absorb the change and to make it part of everyday practice. So, where there are new requirements, I think that degree of flexibility, tolerance and support in the transition arrangements is really key.

And I guess time, then, for any organisations, as well, to be able to supply the information needed would be—.

[Inaudible.]—decision-making processes, for sure. And also, I suppose, the question in terms of varying discounts or amending discount exemptions is that businesses have become reliant on some reliefs over a number of years, because they've been in place, so there's that consideration as well, I guess.

Okay. Thank you. Have I covered everything? Robin's ready. Robin.

Yes, I'm not waving this time. I think that what my colleagues have just said emphasises to me how cumbersome and complicated the whole system is and how I think we need to look at it in terms of simplifying the whole process from top to bottom. I know it probably sounds easy for me, sitting here saying that, but I think that's a part of the issue, that people don't understand what they're entitled to, and when it comes to reliefs, and so on, people don't know what's available. So, I just feel that there's a need for us to be looking at this in the round in terms of simplifying the whole process. Thank you.

We've had a few discussions about that in the Senedd, that not everybody claims what they're entitled to and we need to promote that more.

I suppose that takes me back to the point I made earlier about the automatic awards, not for all reliefs, I understand that, but certainly where it is obvious that a business qualifies or meets the qualifying conditions for a particular award. That certainly helped.

Thank you.

Okay, Carolyn?

Yes.

Okay. Let me ask one or two questions on completion notices, and firstly whether you agree with the proposals to extend the procedure with regard to completion notices, so that it's not just new buildings, but properties that are temporarily removed from the rating list for alterations, and whether you think that those proposed changes will resolve the issues with the current process.

I think in general, we are in agreement, and we can't see any issues at this stage. It would allow properties to be brought back into rating quicker and so avoid unnecessary billing delays, which benefits both the authority and the ratepayer themselves. From an operational perspective, I think we've decided quite unanimously across local authorities that this is a positive move that they wish to see; it will help the process and avoid a period of uncertainty for the ratepayer, waiting to know what their bill is going to be when they're entered back into the rating list. So, it's something that we support and we think it's a positive proposal.

Okay. The explanatory memorandum states that this provision, this change, will result in modest additional administrative costs for local authorities. Is the WLGA content that there has been enough analysis, particularly with regard to large urban areas and whether or not they might be disproportionately affected by the change?

It's something that we haven't gone into in complete, full detail. We note the costs in the explanatory memorandum, but at the moment, it does seem to be—. As it's a new procedure and something that we're not fully aware of the scale of, it will definitely be something that we'd have to monitor, through implementation. And we would hope to be able to continue the dialogue with Welsh Government, and then if it does become something that is much more burdensome and onerous than was expected, it is funded accordingly. But it's something that's going to be quite a new procedure, so we'll enter into it with trepidation, really. We note the costs that are noted, and we think they err on the side of caution, but until we actually really see how it works in operation, we can't elaborate any further at the moment on that point.

And there is that understanding with Welsh Government in terms of this particular legislation, is there?

I am aware that—. We do have regular discussions and we speak about coming involvements. Underneath the Bill, we know there's going to be a whole host of subordinate legislation, and, thankfully, over the last number of years, we have had an excellent working relationship with colleagues in the local government finance division, so we are able to raise issues very early and work towards amicable solutions. So, we know that we have got that vehicle for conversation and we do have regular, frequent and productive conversations with colleagues who are able to then amend the guidance, change legislation, work on the subordinate legislation. We have got that working relationship, thankfully. So, we will be able to have that conversation, moving forward.

Okay. Thank you all very much. If nobody has anything to add on those matters, we will move on to Jayne Bryant. Jayne.

Diolch, Cadeirydd. Good morning, everybody. I just want to ask a couple of questions on discretionary relief and varying exemptions, what type of circumstances discretionary rate relief might be applied by authorities and why would it be considered beneficial to remove that six-month limit.

Currently, discretionary rate relief within Rhondda Cynon Taf, for example, is awarded mainly to not-for-profit organisations or social enterprise companies. So, our current policy allows for relief to be awarded to organisations like sports clubs, community centres, altruistic organisations and sporting grounds, as a couple of examples. The proposal to remove that limit or the existing limits would enable councils to award relief retrospectively where ratepayers have delayed making an application, for example, and that's something that we are able to do at the moment, but, obviously, within the confines of the existing regulations.

Thank you. How will the provision to remove the limit provide local authorities with more discretion and flexibility—you've given an example there—and what impact will it have on councils' budgets?

Certainly, from my perspective, I don't see a significant impact on council budgets. Generally, from my experience, applications for those kinds of reliefs are made within time and there are very few occasions where we have to consider any kind of backdating to a previous year. So, I wouldn't anticipate a significant impact on council budgets.

Thank you. Just on NDR multipliers, do you have any views on the provisions that would allow Welsh Ministers to create additional multipliers, and the anticipated benefits or disadvantages associated with that?

I'll take that one, yes? Currently, the same multiplier applies to all hereditaments, so it's easily understood by ratepayers. We accept the provision that additional multipliers could be used to support certain sectors, perhaps renewable energy as an example, or to address a specific gap in the economic market. But we do have concerns about bringing in tiers of multipliers. We think that, should that step be taken, then it needs to be fully consulted upon, with clear, detailed assessments, a fully detailed regulatory impact assessment, looking at the perceived impacts and benefits of it, because, technically, you're introducing then a two-tier system into an established tax-collecting mechanism. That will create some instability and needs to be carefully planned and managed. We're not against it, but we're erring on the side of concern that it's something that hasn't been done. To have the power to do it, it's great. It has been done—it's been done in London for Crossrail, but with a specific major project. So, it can be utilised, but, at the moment, we've got a system that is stable and easily understood, and we think that any consideration to changing or bringing in additional multipliers for certain sectors needs to be thoroughly explored before implementation.

Diolch, Cadeirydd.

Diolch yn fawr, Jayne. Sam.

Thanks, Chair. With the potential of multipliers being in there, would you anticipate a risk of increased avoidance? So, potentially, if I had a business that looked like one thing, but there was a lower rate if my business looked like another thing, I could perhaps make a move into that, and how would you—? What role might you play, do you think, to monitor that and evaluate that potential avoidance?

I think it's a very good question. For example, when we’ve done previous schemes in the past and support schemes where you define a category of a property or a business that’s eligible for relief, naturally those who are outside it question and look to possibly change or—. We’ve had examples in the past of just slightly changing the configuration of the business premises, so it’s public facing or non-public racing. So, it’s a concern that, yes, if you’ve got a two-tier multiplier system, where one is obviously more beneficial than the other, then it’s natural that people would look to see how they can amend their business model that they fit into that one. It would have to come with very specific criteria, but, obviously, because it would be a financial incentive, there is scope for areas to look at where it could lead to avoidance tactics.

I don’t know if there’s anything you wanted, from a local authority perspective, to add to that element.

No. Well, only to add, I guess, that the difficulty in policing that kind of activity, it is—. To get around as many business premises as we have within an area, it’s difficult. So, I would agree that there’s potential for it, and, as Lisa mentioned, we’ve had those examples in previous schemes, where we’ve got embroiled in discussions about what the business actually is, and you can imagine that happening again.

Okay, thank you. Sorry, Chair, Susan wants to come in.

Oh, sorry, yes. Susan.

I’d just like to add that the provision to be able to introduce those additional multipliers isn’t quite the same as actually doing it, and that discretion is going to be at the heart of this change, and judgment and clarity, just as we’ve talked about in relation to all other aspects of transition and change, so I think that’s quite important, to stress that the provision to do it isn’t the same as necessarily doing it readily and frequently. It seems to have some very specific uses that could be explored, but those would remain to be developed, and we’d be looking to see more information on that, I’m sure.

I just wanted to go back to the question of the six-month limit as well, and, again, this question of showing consideration to the objectives, and, if a local not-for-profit organisation or charity is going to make a major contribution in an area, to deny that relief because they are new and have developed into that role, and have been made aware of the relief just that bit too late, seems to be counter-productive to me, so I fully support that change.

Thanks, Chair. I guess, on the provisions front, we get nervous sometimes about allowing that provision to Welsh Ministers, because I guess they could use it, couldn’t they, at their discretion. Thanks, Chair.

Okay. Joel. Joel James.

Thank you, Chair, and thanks ever so much for coming in this afternoon now. It’s so nice to see you, Matthew. I well remember the e-mail exchanges we used to do about council tax rates, so it’s good to finally put a face to a name.

I suppose I just wanted to ask a couple of questions on council tax, but the first one I wanted is to do with—and you’ve briefly touched upon it in terms of charitable rates relief and the requirements from them, but, as you know, with the new legislation that’s being proposed, there would be a requirement on non-domestic ratepayers to—if there’s anything that affects the valuation of their properties, they have to notify the valuation office, and they’ve also got then to do that on a yearly basis as well, and I just wanted to see, get an idea of, the implications from a local authority point of view of what that would be for councils in Wales, really.

I think the intention is to be applauded, I guess, in terms of the flow of information between ratepayer and valuation office. And from a local authority perspective, if that information flows through to the local authority, then that would help, and it would be welcome. My concern is that, over a number of years, I think that there's been a lack of engagement between ratepayers and local authorities for a number of reasons, mainly because some of the reliefs that have been in place have helped to distance ratepayers from the local authority. So, as an example, most small businesses now with a rateable value of under £6,000 don't have any rates to pay and, therefore, feel that there is very little need to engage with the local authority. So, the request, I guess, for information may fall on deaf ears and, obviously, there's provision within the regulations for fines et cetera. So, that may be an issue that I foresee and it certainly came to light during the pandemic when we were offering, or Welsh Government were putting forward, business grants: suddenly we were inundated with information from businesses that we had never heard of. And I suppose the nature of the reliefs, in terms of providing full relief for a rates bill, has meant that many businesses have just lost touch with us, and that's left a gap of information currently. So, there is that potential for ratepayers not to take up the offer from the valuation office to provide information.

I can well remember, during COVID payments, the amount of businesses in my ward that were coming forward basically trying to get a revaluation from the valuation office because of the implications that it was having there. So, does anyone else have anything to say on that?

Just to say that we think it's a positive move, but we have to be mindful that this is something that ratepayers are not used to doing. So, we're supporting it—anything that improves the flow of information can only be of benefit to both the valuation agency and the local authority, and indeed Welsh Ministers looking at legislation. But it's not something that will be achieved quickly and we think there needs to be time to actually get systems in place and the communication flow established before any penalty regimes come in, because it's something that ratepayers are not used to doing. So, we don't want to have a great big penalty measure for something that ratepayers have just been—. I'm not saying been ignorant of, but they haven't had to engage, so I think we need a measured approach to doing that.

Okay. I think that makes sense and, as you say, the amount of businesses that have no engagement because they come under the threshold—. If I can turn to council tax then, obviously, we discussed there businesses having the three-year review; with residential properties now, it's the five-year review. I wanted to get your idea of the potential benefits and disadvantages of that, because we've heard from previous evidence sessions that there might be implications on house prices, but then, obviously, the more staggered that review could be, rather than having it—. It could even be a three-year review rather than a five-year review for properties because then the change in property prices is more—. I don't want to say miniscule, but it's lighter than if it was every five years. And I want to get an idea of the potential benefits and disadvantages of that.

But then, also, the legislation allows for the Minister to call for an earlier review, but also allows them to put a review back, and I was wondering about concerns there, because the concern there that has been highlighted is that council tax revaluation is a contentious issue and, as Carolyn mentioned earlier, we had it 20 years ago, and then England were meant to follow, but, because of the impact it had in Wales, they never did. And that was a political decision. I just wanted to get your views on that, really.

And a final question I have, then, if it's okay, again links to the five-year revaluations: what sort of additional funding are you looking at, or support do you expect from the Government to help with that? Because I know—. We had the valuation office here earlier, the costs for them could be anywhere from £12 million to £15 million, but could also be up to as high as £18 million. I just wanted to get your views on that.

Okay. I'll start with this one then, then I'll hand over. So, I think speaking to business rates, non-domestic rates, as you've just mentioned, so we've got the argument for a regular revaluation, and I think the arguments for and against it are quite just. So, with more regular revaluations, the property values are up to date, the tax base appears more transparent, and there's that clear, visible link between what your property is currently valued at and the relevant banding that you're put in. If it becomes a regular and established system, it should result in fewer appeals from taxpayers because they're seeing it following the property market, which we know goes up and down on a periodic basis.

Similarly, I think the power to amend the timings is needed, because a regular revaluation might actually be ineffective. If you've got a long-term period of stability on the house market, it could just be a whole undertaking for negligible benefit. I accept that in moving forward, though, that we could have improvements in technology that enable the Valuation Office Agency to revalue properties at a much speedier and more cost-effective method. It's certainly not the process that was achieved ready for the inception of council tax in 1993, where you had to drive around a street and look at the properties. We have got lots of online tools looking at property values.

We think that it's sensible that there's the provision there to amend the timings between revaluations, but I think the fact that we're looking at this now—. We've got a tax base, as you've mentioned, that's based on 2003 property values, effective in the 2005 revaluation. So, we're not starting from a stable footing anyway, if we'd gone through a revaluation and now want to put it on. So, I think we're mindful of the fact that we know that whenever we start a process of revaluation, there's going to be turmoil for ratepayers, because there's going to be change. They haven't had a change since the 2005 revaluation. And you notice that England stepped away from doing their revaluation, and our colleagues in Scotland are looking at some amendments to the higher bandings only. I think it's a bold step for us to be looking at a revaluation and bringing it up to date. There has been a huge change in the property and economic markets since 2005, and I think it's only fair that that is reflected.

Looking at what the long-term costs of it could be, though, the estimates in the impact assessment in the explanatory memorandum are very thorough, and there's been lots of engagement with local authorities. But I guess the difficult point from a local government association perspective is that we've yet to start a process of revaluation. So, we need to know what the turmoil and the fallout is going to be from the first one before we can measure it, moving forward. It will obviously be the worst one, because bringing any property value up to date over 20 years is going to have a significant impact on all taxpayers, whether positively or negatively. So, moving forward, we think that the intention to establish a regular process and then allowing that timing so that, if it actually is not needed—we could have a 10-year period of economic stability, but maybe I'm optimistic there—you don't have to go through the process then if it's not needed, and it'll just cause an additional expense.

Yes, thank you. I think two reflections from me. One is that it is always a courageous decision to look at revaluation. No-one's denying that, and I think it's to the credit of Welsh Government that they are contemplating this. People are much more conscious of property values these days, with the availability of information. There's a near-obsession with property prices in some parts of the UK—perhaps not quite so striking in Wales, but nonetheless, people are very mindful and aware. And I think the knowledge that a more regular, more frequent valuation would be the norm would be welcomed by most residents.

I do agree with the point that, if there's a very, very good reason for not holding that five-yearly review because of very unexpected stability, then that provision would be helpful. But, yes, I think this is a courageous and appropriate move that's being proposed in this legislation.

Just one more question, if I may, Chair.

Yes, go on, Joel.

I suppose this brings me on to a last question in terms of local authorities budgeting for it. Have you been given an idea of the cost implications that this will have for you? And do you need or do you expect there to be more money coming from the Welsh Government to be able to help to implement all of this?

I think, on the first point on the revaluation, if we proceed with, for example, a planned 2025 revaluation, if that's to happen, we are aware that that's going to cause significant turmoil, because every ratepayer will be affected. It's 20 years. So, we need to factor in what that costing will be, and we would expect that to be adequately resourced. Similar to non-domestic rates, as it becomes more regular, the costs then balance out because ratepayers are used to it—and they're expecting a change because it's going to be reactive to markets. But from a costing perspective, yes, we are aware that the first stage, which is potentially a 2025 revaluation, will be quite costly because we will deal with hundreds of thousands of queries from taxpayers disputing the value of their property, and they'll come to the local authority first before they start the formal appeal mechanism.

Okay. Lovely. Thank you.

Okay, Joel? Okay. Luke Fletcher.

Robin put his hand up, Chair.

Sorry. Robin.

Yes. And if I can just add, the other factor that may well be impacted is the council tax collection rate. If people are going through a process of challenge and then potentially appealing, then they may withhold payments during that period, so that could have a financial impact on councils as well. So, it's just something to bear in mind.

Yes, okay. Thank you, Robin. Luke Fletcher.

Diolch, Cadeirydd. If I could just touch on, for a moment, council tax reduction schemes. In the Bill, there's a proposal to move to a more national system. Is that a good idea?

Yes, absolutely. Local authority benefit departments have been pushing for this for a number of years. As we know, the council tax reduction scheme replaced the abolished council tax benefit. What we find at the moment is because the existing regulations are bound to a specific financial year, they can't be reactive. You can't refer to any change. The current process is that the regulations are laid in December, approved in the January, a council has to adopt their scheme by 31 January of that year ready for the April implementation. No change can take place once that has happened. Conferring the duty on Welsh Ministers will allow them to respond to crises and national emergencies. We've seen, unfortunately, too many of those over the last three or four years and the regulations could not respond. We had the pandemic, the situations in Afghanistan and again in Ukraine. We had to ask local authorities to use their discretionary powers to support people affected because the regulations couldn't be changed because they are time-bound for that year. And from the local authority perspective, it actually removes the requirement for them to do an annual consultation on something that doesn't necessarily change from year to year, but it's part of the process. So, it's actually a change that has been requested by local authorities; it benefits the—. Currently, we've got just under 270,000 households that benefit from the council tax reduction scheme; this actually does support those even better moving forward because the regulations can be changed to react to a situation.

So, I imagine Lisa's view is reflected with Matthew, Susan and Robin. So, unless you want to come in on anything additional there? No?

No. Just—

No problem.

—I would agree with Lisa's comments on that issue.

No worries. Thinking about section 20 of the Bill, so, this publication of notices, is the provision to move to publication of notices in a digital way welcome as well? We can assume that there are cost savings there because there's no need to publish in newspapers.

Yes. I mean, the requirement's always been to publish in at least one local newspaper, but I think we are all mindful of the fact that printed media is in a different position in 2024 than it was in 1993, at the outset of council tax, with a reducing number of local newspapers in circulation. We note that the cost savings are relatively low in respect of removing this requirement. I think that in the explanatory memorandum the cost is about £33,000 per year across Wales. So, it's a low saving, but, unfortunately, we don't actually know how many people read the paper either and are picking up that information. So, local authorities always do put the information online as well, as supporting.

But we want to add a note to this point that we feel that some local authorities may wish to continue that approach as well, and we wouldn't want any change in the Bill to preclude them from doing that. It's what best suits their communities. And local authorities, as Matthew can expand on from a Rhondda Cynon Taf perspective, know how to reach their residents. And there will be some communities—we've all got them, you know, where we live—that still rely on the local paper. So, getting that information, you know, it's a way of actually ensuring that the information has gone there.

So, we kind of agree with, you know, there is no longer the requirement, but we wouldn't want it to be actually, you know—. It's the local authority decision, it's what best suits providing information. They have to provide the information in accessible formats and ensure that people who aren't digitally included can get that information, and sometimes the local newspaper is still the best way for doing it. But, again, we accept that that is a local authority decision for what works best within their area.

So, essentially, flexibility to do what is suitable for whatever local authority area is going to be important. I was going to follow up with a question, just roughly, around the cost savings and whether the impact, then, that that potentially could have is essentially worth it, but I know, obviously, you've referred to it in your answer already that we don't actually know how many people are reading those adverts in the first instance, so an impact assessment, I imagine, is very difficult to make.

Yes. We could only actually say, 'Well, this is what it costs actually putting the notice in the paper,' because that's the only tangible cost we can extract there. What we don't know is how many of the circulation of that newspaper actually read that article and possibly questioned it afterwards. As we say, we'd like the flexibility that it can be retained if the authority feels that's the best way in their area to provide additional supporting information.

So, I imagine with the duties that are within the Bill then, to publish in a way that those who might not have access to digital means can still see it, local newspapers could still be in the mix there. Are there any other ways in which you would look to meet that requirement or duty?

I think it's probably important to note here that the notice that we are referring to is the notification of what the council tax will be at a band level and community level, which is provided within the council tax bill itself, as well—supporting information in with the bill. From the point of view of the statutory notice, within Rhondda Cynon Taf we used to have, and well, we still do have, local papers, but we used to publish the notice in three papers. We changed that approach a number of years ago now, just to put it in one, into the Western Mail, for example, so we've streamlined that as it was, and put the information online as well. So, we're touching both bases, really, and always have done.

So, in essence, in reaching the sort of duties placed to ensure that people without access to digital can still see those valuations, not much is going to change there, really. The only change here is that additional, digital requirement.

I don't anticipate much change in that, no.

Okay, great. Did anyone else want to come in, before I hand back to the Chair? Robin.

Robin does, I think, yes.

Yes, I think it really is a time for change as far as this is concerned. If we just look at north Wales in isolation, when you consider that the circulation of the Daily Post, which is the local paper for north Wales, is a little over 10,000 per day for a population of 750,000, it's clear that very, very few people are going to get that information from a local newspaper, so I think the time has come whereby the requirement to publish notices in newspapers needs to be withdrawn, but I'm happy to go along with the notion that if a local authority wishes to continue with that practice, then obviously that they can do so. But when you start thinking about those circulation numbers, then it really does show how little value there is in publishing those notices in the local press.

We've seen that as well in the fact that newspapers are moving more towards online already, anyway.

Those local newspapers are already moving to online means of communicating as well. Daily Post, I think, is a good example of that. Susan, I'll come to you and then I'll hand back to the Chair.

Thank you. Two quick points, really. One is that this is a legislative opportunity. I don't see the trend for information to be online reversing any time soon, so while we're still in that mixed economy of information, if you like, this is still an opportune moment to intervene. Also, to say that the press has traditionally meant printed press, but the press continues to exist and online press is growing in influence. By connecting through social media policies into news platforms online, we may actually be reaching more people, but the independent journalism element of it is still present, and I think that's important too.

Great, thank you very much.

Joel, yes.

Thank you, Chair. It was just to back to you, Councillor Morgan, there. I know Newsquest have raised concerns about this and the impact it will have on local news and local journalism. Is that something you recognise? My view is that local news, the circulation, is getting fewer and fewer, or lower and lower, I should say, but, also, there is an importance to keeping it, in terms of monitoring what goes on in council meetings, or what goes on here, I suppose. Because they were concerned that it's like the start of a slippery slope. Is that something you recognise?

I think I'd repeat the point I made earlier, which is that independent local journalism, to me, is very, very important, and many printed publications are now operating a dual sort of platform themselves between digital and print, and will, probably, gradually, move across to more digital offering as time goes along. So, yes, I'm very concerned about the continued viability of an independent local press. The actual form of that information, and of the reporting, I think, is less of an issue.

Okay, Joel? Okay. Well, thank you to all our witnesses for this session, for coming in to give evidence to committee today. You will be sent a transcript to check for factual accuracy. Diolch yn fawr.

Thank you very much.

Diolch yn fawr.

Okay. The committee will break until 13:15.

Croeso nôl. Welcome back to committee for our final evidence session of today with regard to the Local Government Finance (Wales) Bill. I'm very pleased to welcome, joining us here in the committee room, Robin Osterley, chief executive of the Charity Retail Association, and Llŷr ap Gareth of the Federation of Small Businesses, and joining us virtually we have Morgan Schondelmeier, Welsh Beer and Pub Association. Thank you, all, for joining committee today to give evidence. Perhaps I might begin, then, with an initial general question or two, on the general principles of the Bill—whether you could tell committee whether you believe the Bill's provisions and general principles of the Bill are welcome, and what your initial thoughts are. Who would like to begin?

Okay. Thank you. I think, for the Federation of Small Businesses, we're quite happy with a lot of the Bill in terms of the tidying up exercise it has, making sure that the powers are in a rational place. We welcome the idea of the multipliers being able to be used for different sized businesses, a provision that hasn't been available in Wales but has been in England and Scotland. So, I think it's important to note that this allows the Welsh Government potentially to be able to support small businesses and target particular areas of small businesses better for support in the future. I think, in that regard, it would be quite useful to ask the Welsh Government, given it's saying that it needs that flexibility, what it would have done differently with a draft budget, as has been outlined already, as there are powers in here that perhaps would allow it to use the multiplier more effectively than the way it has in the draft budget. I think that would be a very useful way for us to have a signal about how we can use the NDR system in a better way in the future to support smaller businesses.

Okay. Thank you very much. Did you want to add anything, Robin?

Sure. So, likewise, we think this is a step in the right direction. The business rates burden always needs to be addressed and thought of carefully, and it feels to us like this is a good move. I guess we might have a couple of quibbles, which we might come on to later, but, generally speaking, I think anything that is going to reduce the excessive burden of business rates on retailers, including charity retailers, feels good to us.

Okay. Did you want to add anything at this stage, Morgan?

Just, likewise, that this is definitely a step in the right direction, particularly when it comes to a move towards more frequent revaluations and, as already mentioned, the provision for more multipliers, more specific multipliers, and also the ability to confer and vary reliefs and exemptions, which, of course, has been crucial to sectors like the hospitality sector in the last couple of years. So, again, a lot of good detail and really looking forward to discussing more.

Okay, thanks for that. What the Minister has said, amongst other things, about the Bill is that it will help deliver a local tax system that is 'demonstrably better for Wales'. So, from what you've said already, would you agree with that or would you not want to be that general?

Go on, go ahead.

Okay. Well, I think there's the potential for it to be better. Now, for us, and for our members, I think the fact of the powers will be less of interest to them than what is done with those powers. I think it's important to note the current financial settlement and the difficulties for local government finance, for example, and whether it's important to make sure that the tax system is able to work appropriately for what we want for small businesses. So, it shouldn't just be about revenue raising; it needs to look also look at behaviour. It looks at incentives—it looks at incentives to the high streets. The Public Accounts and Public Administration Committee today has brought out a report on the high streets and the NDR rate system being a particular problem in terms of helping small businesses in high streets. So, I think, yes, it has the potential. We do need an outline and strategic thinking about how we use the NDR system. Imperfect though it is, it is a lever that the Welsh Government can use to get investment and get businesses into particular areas, such as high streets. It's possible to provide the support necessary for small businesses in this particular moment as well.

Now, I just want to point out the level of how difficult things are out there. The current index for small businesses came out this week, and, for the hospitality sector, the food and accommodation sector, the confidence level, in our survey, was -71. Now, -71 is by far the highest number that I've—well, the lowest number—ever seen, outside of COVID lockdown. It really is quite bad, and we've seen, from ONS statistics, that high streets have not had a particularly good Christmas. There have been other areas, outside of town, that have had a better Christmas than that, but I think that just shows the way that we need to think about the NDR system as a way towards that economic development and to see the development in our communities that we want to see.

Thanks for that, Llŷr. Robin or Morgan, would you like to add anything?

Yes. I think I would agree that it's all very well giving Ministers additional powers and streamlining the system, but, in the end, it's the outcomes that are important; it's what the Ministers do with those powers that are most critical. And, from our point of view, I think we're, as I said earlier, reasonably happy with what is being proposed. But the devil is always in the detail with these things, and it would be nice what actually ends up—though that, I agree, is not necessarily the purpose of this Bill. So, yes, I think I'd agree with Llŷr that there's some really good potential here for modifying the tax system to the benefit of charity retailers, and that's really important that we do that, because charity retailers play an extraordinarily important part in Welsh shopping life, as they do in shopping life in the rest of the UK, and there are some really strong and important reasons why charity retail needs to be supported, which we can go into, if you like.

Okay. Morgan, did you want to add anything at this point?

Again, echoing what has already been said, I think, as we're looking at a Bill that confers the powers, it's important to recognise why they might be used. And you can look at sectors like the hospitality sector, the pub sector, which are, across the UK, overtaxed by several per cent, amounting to £400 million in extra taxation and business rates. In Wales, in particular, we calculated that pubs are £6,000 worse off than their English counterparts because of the business rates system. So, if we're talking about a specific Bill that allows for a better rates system for Wales, this absolutely has the opportunity to do that through not only more frequent revaluations that are more accurate, but also the ability to create specific multipliers or create specific exemptions or reliefs. So, there is a lot of opportunity there, and I think this Bill definitely is a great start towards grasping those opportunities, as fellow panellists have said.

Morgan, when you talk about the advantage for pubs of more frequent revaluations, is that because there has been a decline in the property values of those pubs over an extended period of years, in general?

Yes. So, pubs are valued differently from other venues. Hospitality, in general, is typically valued based on something called 'fair maintainable trade', and this means what could the reasonable publican be expected to generate from that pub—what revenue can they be expected to generate. And this is not only based on size like most retail venues are in rents, but it's also based on food and drink split, and, 'Are you in a high street location? Are you a historic pub that might drive trade there because it is a Tudor building or something like that?' So, it's not as easy as, 'What is your square footage and your rental agreement?' It is based on trade, and that is why, especially in recent years, we've seen such a need for specific reliefs for the hospitality and pub sector, but also really large changes between revaluations, which again is one of the reasons why we welcomed the reduction in downward transition, because a lot of pubs have actually had their rateable value cut because of the poor trading that we've seen in the last five years or so.

I see. Okay, thanks for that. We'll turn to other committee members, then, and, firstly, Sam Rowlands. Sam.

Thanks, Chair, and thank you, all, for joining this afternoon. We really appreciate your time. I'm just going to spend a bit of time, perhaps, just looking at one of the major pieces in this proposal, which is moving the revaluation cycle for business rates from five years down to three years, and initially what you see as the potential benefits or disadvantages of that move.

Yes, we've been advocating this for quite a long time, and it's basically on the same principle as Morgan was discussing now, in that we want to make sure that that is more reactive to market forces, that it's there to pick up on any economic changes. Obviously, since this last revaluation—the previous one that was in 2015—as you can imagine, between 2015 and 2021, there's been quite a massive change in terms of how our economy is functioning. So, I think it's important to have that as a basis there. I think the more regular they are, the better in that sense.

I think there is a question around what the capacity of the Valuation Office Agency is. There are limitations as well, as mentioned in the explanatory memorandum, around how the Welsh Government can influence things when the Valuation Office Agency is not devolved. So, I think that's an issue. For example, we question in our evidence if, in fact, outside of the cycle, whether revaluation, as posited by Ministers, is actually a realistic thing to happen, or if it's just there on paper. So, I think there are things there that we would want to discuss.

The other thing we also pitched in there is just that idea of watching out for unforeseen consequences, I guess. We do know that rents are quite often the basis for a lot of the revaluations, and that doesn't necessarily work as a proxy in every case in an effective way. So, I think we need to be able to work out, much like Morgan was saying for the hospitality sector, how we make sure that those valuations are reflective of how those sectors work. Now, in some respects, what we've done is actually use the rate reliefs in order to make up for what's wrong with the system in terms of how it deals with property, and that's been the way to deal with it. I think it's important to note that, while we welcome a better use of the system, the system itself is not perfect.

I think it’s important as well, just in terms of a strategic review from the Welsh Government on how they use the NDR system, that we were a little concerned about what the First Minister said last week in terms of this being a road out of subsidy for small businesses. For us, we don’t really see the rates relief as necessarily a subsidy. It’s there to correct and compensate for a system that isn’t fair across the board. I think it’s important to note that, so when we do get to the outcomes of what these powers are used for, we need to be aware that that’s the point here—that we’re looking for a system that is fairer to our members and to small businesses in different sectors, and is more reactive to economic forces, and by sector and by location. That’s why it needs to be quite clear what the principles for that taxation are when it comes to trying to tidy up the system, if you like.

Perhaps before others come in, could I just probe that a bit further, Llŷr? You're absolutely right; I understand that attaining more fairness is the right thing, but there also has to be a level of stability, I guess, doesn't there? I guess there must be a sweet spot between where you have that stability and it's reacting to market conditions. So, five years, three years—I guess you're saying that feels closer to that sweet spot. But there is also talk of the Welsh Government potentially considering making that an even shorter time period. Would you have any reservations at this stage around that? Or do you want to comment on that position at all, about where that sweet spot might best lie between fairness and stability?

It's always a difficult balance, isn't it? And it's the same with the reliefs as well, in that you add more complexity where you’re trying to make it more fair, in a way, by adding more and more compensatory mechanisms. I think the idea is that having the stability through a valuation system that is more reactive allows for more stability, perhaps, in the rates relief system. That gives you the bedrock, if you like. Getting that right is difficult. Yes, we’ve advocated more regular—often annual or biannual—revaluations. I do think we need to make sure there's an impact assessment of that in terms of capacity and cost, as I mentioned before, for the Valuation Office Agency, and whether it means that doing it more regularly means that it’s less of a full-on process in itself, as it were.

It's not just an impact on the valuation office. There's also an impact upon the shops and businesses that are actually having to do that, because if they want to apply for—if that's the right word—a reduction in business rates every time any of their premises changes, then the ability of the valuation office to hold that capacity to do that becomes extremely difficult. And they are then forced into a whole load of processes simply in order to reduce their rates bill rather than to actually carry on with their businesses, effectively. So, the burden falls on both sides of the fence, I think, and for that reason I think right now we would certainly find annual revaluations overly burdensome. But were the valuation office to be able to introduce some really sensible high-tech solutions to this, and be able to progress these revaluations extremely quickly, then that might become a different story. So, I think a lot of the answer to your question depends on the infrastructure that's available to the valuation office to handle these kinds of changes. You mentioned the sweet spot; actually, we are reasonably comfortable with three years as a sweet spot, because I think it does create that balance between being able to change it when necessary and not having a huge workforce within your organisation simply looking at rates revaluation.

Yes, I think that's the point. The bedrock, as I was mentioning, in a way, is that getting that right means the burden of the other stuff is less, if you see what I mean. But there are a lot of ifs there, so I think for the moment let's see how the three years goes, and we can look at whether we need to look at it further.

Morgan, do you want to comment at all about that move from five years to three years and getting that balance right between stability and fairness?

I would just echo what's already been said. Moving to three years is great to create, again, these more accurate ratings. We would need to see how that plays out in reality, not only, as we mentioned, with the VOA's resources, but also businesses being able to comply.

One of the things that is on the agenda for later, the duty to notify the VOA of changes to your rateable value, is already a burden that we are seeing placed on businesses because of a shorter revaluation just to three years. So, if we were to go down again to one year, as was already said, you could risk a lot more burden on businesses, when, in fact, a lot of businesses might be glad to have a clear three-year budget line for business rates, as opposed to something that might vary a lot from year to year.

There are mechanisms that you can apply to change your business rates in between valuation cycles, like material change of circumstance and things like that. So, definitely, a three-year move is the right move at this stage, and we would need to make sure that there is a cost-benefit analysis after that has been allowed to bed in for a little while, to see if a move to a shorter revaluation adds enough benefit.

Thank you, Morgan. I'm not sure if anyone else wants to comment any further on that point. No. Okay.

And then—I think that this is just to you, Llŷr—the evidence that the FSB provided to us as a committee commented that

'more regular valuations should not mean more regular hikes in costs'

and therefore not be aimed at maximising revenue—I guess that's the point that you are trying to make. Would you be able to expand on that a bit further and perhaps speak to that point?

Yes. Again, it's one of those unintended consequences, and possibly, in particular circumstances, there may be an incentive from the side of Government to maximise the revenue at this particular moment on that front. The point, though, is that, as mentioned, that valuation system is itself not perfect. We need to make sure that it actually reacts to economic changes either way. I think that it's just the fear that there's a creep there. The automatic expectation is that they go up. So, it's just a check on that to make sure that that doesn't happen, because the more that that happens, the more that we then have to again go into compensatory reliefs, and the more complex it gets again. So, that's the sort of balance, really.

Does anybody else want to comment on that point at all? No. Okay. Thank you. This is playing on my mind a little bit. A couple of times, Llŷr, you have talked about this not being a perfect system, and nobody is suggesting that it is at the moment. But I wonder, is there anything that you think is being missed in this Bill that could get it closer to perfect, which hasn't been thought through and that you think is a missed trick, as it were?

I think that, to be fair, there is quite a lot in there that is good. The multipliers by size and location are useful. I do acknowledge that the space for Welsh Government to actually change stuff is also limited, in that what would probably be useful would be looking at the valuation and revaluation, and how we balance the different effects for the economy. So, less rent and more—. There is a discussion about needing to take into account footfall and trade.

It's not a perfect system, but it's the system that we have got. You probably wouldn't have started from here. We have always discussed looking at other options, but again, the problem is that the transition itself from this system to another system would be so complex at the moment that it's very difficult to do that. So, it is, in fact, looking at sticking plasters in some respects.

I think that the important thing is, like I mentioned, the powers that are in there seem to be good ones to provide something of a better system. It's the way that we use them: who decides and on what basis? I think that the discussion around NDR and what that is for—. You will have noticed, in our written evidence, that we put in our general principles for good taxation. Working that through and seeing how we use the system to drive economic development locally is important, I think. It won't do it by itself, but it's a sort of 'every little helps' thing, I think.

All right. I appreciate that extra bit there. Thank you.

Could I just add? In answer to your question, very few systems can be perfect. Certainly, some systems can be improved. Retailing—and this very much applies to charity retailing—thrives on its flexibility, on its ability to adapt to the conditions that it finds itself in on the high street, its ability to adapt to what customers want and its ability to respond to new economic situations and new situations with suppliers and, in our case, new situations with regard to donors and all of those kinds of things. Retailers have to be really, really flexible and that applies as much to the space in which they're operating as it does to their product selections. Of course, charity retailers don't get much in the way of product selections because they rely very heavily on donated goods, things that come through the door. If that flexibility results in changes to the space, whether that's actually increasing the space or reducing the space or changing the balance of space from sales to stock, stockrooms or whatever it is, it would be lovely if the rating system could rapidly reflect that, and the changes that were brought about, whether they were positive or negative changes, would be reflected in how much retailers have to pay. I can't see that happening without the underpinning of some really serious technology.

So, it feels to me like, if we were to be thinking about this a bit more blue-sky in the next few years—and this goes down to one of the questions that I think there will be later about how much input the ratepayers have to give to the valuation office—if there was a way of doing that far more automatically and easily so that the computer that is at the end of it spits out a result that is actually highly appropriate to that particular retail environment, that would help retailers substantially. But that's an investment; there's not doubt that that is a significant investment in order to get that system right. But it would be a direction of travel that we would love to see, I think.

I guess the trick there, as well, is the idea of efficiency and getting more efficient machinery and systems into those areas so that it fits with the green agenda. And again, the question of how much the Welsh Government can do in that space, whether it's through reliefs or whether it's something that can be done through valuations, is another question, I think. But that's clearly part of the idea of using the system to drive behaviour, if you like.

Thank you. Just coming on to the point of reliefs, within the proposals in the Bill, the Welsh Government propose powers to confer, vary, or withdraw reliefs and exemptions. I just wonder if you have any thoughts on how you think the Welsh Government should go about developing policy in that area, before looking to exercise those powers.

I think we are a little concerned—that's probably about the strongest we'd want to go—about giving this to Ministers. Under no circumstances would we want to imply that Ministers would be making a lot of wrong decisions if they were doing this, but on the other hand, what they would, I imagine, be able to do is to make faster decisions, and when you make faster decisions, that has a benefit, because everyone knows what's going on more quickly and you don't get stagnated, but it also has the potential issue that, if there is a consideration amongst the ratepayers concerned that those decisions are wrong, it gives them far less time to mount campaigns, to undertake lobbying and advocacy work and to marshal resources to do all that. So, although we wouldn't imagine that the Minister would be making decisions by the sweep of a pen, at the same time, we'd want to ensure that there are certain principles built into that decision making that are inviolable—so, transparency, fairness, the ability to hear counterviews not only from infrastructure organisations like ours, but also from individual ratepayers and all of those kinds of things. And if Ministers are going to put in a system that really gives them the ability to listen and gives people the time to respond to their decisions, then I doubt if we would complain or hold that against them.

There are some examples, not at ministerial level but at local authority level, of some really rapid and rather weird decisions having been made in the area of NDR, and there's often a lack of transparency associated with those decisions, which does make us uncomfortable. We would not want that to be propagated through the system by allowing it to be much easier to make those kinds of decisions. Also, the withdrawal of rate relief specifically—as against amendments of rate relief—seems like it would hardly ever be beneficial to the people who are having it withdrawn. Therefore, I wonder if, actually, it would be better to allow Ministers to modify rate relief, but actually make it a parliamentary decision to withdraw it.

Okay, thank you.

I'd agree with what Robin said there in terms of making sure that all voices are heard. We've written in the evidence, as it were, that we need all decisions to be given a rationale, to provide a reason why there would be any variation, any withdrawal, that sort of thing. There is a little bit of that side that you do need a central point in order to navigate a complex system. On the other hand, you need to make sure that there are local voices, and there's a difference between, perhaps, consistency and varying things according to local needs as well. That would, in itself, if we're looking at the different locations, which is something else that's discussed in the Bill in terms of it being reactive, require that sort of process to be built into that system.

I think, also, we're a little muddy at times, as I've mentioned. This is why that strategy of forward decision making around the NDR system needs to be clarified in terms of what it's there to do, in terms of the balance between, yes, revenue raising, but also, as I've mentioned already, the behavioural aspects, the support for different sectors. What's the framework for that decision making that the Minister would be taking? And you would set, say, any decision that is made against those principles. I think it's important that that's kept there, as it balances the strategic need from the centre, if you like, with local voices as well.

Thank you. Morgan, was there anything further you wanted to add to those points?

If I can just agree that it's really important to recognise the importance of reliefs. It was mentioned earlier, but in absence of greater reform and rebalancing, these reliefs are integral to certain sectors being able to survive tough economic conditions. So, the retail, hospitality and leisure relief is an obvious example. For pubs, that was worth £7 million in Wales alone. So, something like that—again, the idea that that could be amended or taken away without any major consultation would obviously be a cause of concern. We have seen it lowered already in this proposed budget, but I think, again, the ability to have more flexibility and to create a system that works for Wales and Welsh businesses is going to be welcome, but we do need that due diligence and making sure that, when these powers are exercised, there are some safeguards in making sure that it's still going through all due process.

Okay, thank you. I'm fine there, Chair.

Okay. Thank you, Sam. Carolyn.

We have some questions now on charitable rate relief and artificial NDR avoidance arrangements. So, just to ask you: do you welcome the additional requirements to access charitable rate relief for unoccupied properties?

Absolutely. We don't like fakery any more than anybody else. In fact, probably, we hate it even more than most people because it clearly reflects badly on legitimate charity retail if people are faking it, as it were. I think in terms of empty property relief, not many of our members actually have empty properties. Why would you do that? There's not much point in leasing a property and then not using it. So, I don't think it's a huge problem for them. There might be situations where they're undertaking a lot of refurbishment, in which case the property is empty. So, I think we think the proposals in the Bill are proportionate and reasonable, actually. We also don't think that it's very difficult to discover whether someone actually is a proper charity or not. So, I think that should be taken into account when thinking about the proportionality, as well, but, basically, we're happy with these proposals.

You represent retailers, don't you, charity retailers—

Charity shops, yes.

—rather than charities generally.

That's right, yes.

Okay, thank you. There's the additional cost for taxpayers to provide additional evidence, which has been estimated at £7.52 per application. Do you think that's proportionate and whether this will impact some charities, taxpayers, more than others? But I think that's really small charities, isn't it?

I can't get excited about it, to be honest. It's not a huge sum of money, and, as I say, it doesn’t feel like it’s a particularly complex act to find out whether the renter of a particular property is genuinely a charity or not.

Okay. And do you think it creates additional work for charities if they have to provide accounts and information, and do you think that’s particularly burdensome, or is that fair?

No, I don’t think it’s particularly burdensome. I mean, obviously, the vast majority of charity retailers—not all, but the vast majority of charity retailers—are registered with the Charity Commission. That is not onerous to find that out, and that information, their accounts, are in the public domain.

Okay, thank you. I don’t know if that impacts, Morgan, on pubs, and—[Laughter.] Unless they’re set up in a community centre or something, maybe, or—[Laughter.]

I wouldn't have a comment on this, thank you.

Okay.

Sorry, I was just saying it might increase footfall in community centres. [Laughter.]

Actually, I know that there is one pub now set up in a community centre somewhere near me. I think that’s it, isn’t it, really, for me? Yes.

Are you happy, Carolyn? Yes?

Yes, that’s fine. Yes, yes. Thank you.

Okay, Luke Fletcher.

Diolch, Cadeirydd, and I’d like to touch on completion notices. The Bill has provisions to amend completion notice procedure, so how would the proposed changes impact ratepayers, in your view?

Sorry, I'm not sure I understood that question. Try it again.

So, within the Bill, there are proposals to amend the scope of completion notice procedures.

Oh, yes, yes.

So, I’d be interested just in your view as to how that might affect ratepayers.

Yes. I mean, I think certainly from the charity retail point of view, as I mentioned, I don’t really think this is an issue at all. It’s extremely unlikely that a charity will be hanging on to an empty property, because it’s just not the kind of thing that they do. The only time they would be doing it is if there is a massive refurbishment going on, and generally speaking, our members do not spend—. The maximum time they might spend refurbishing a property would be, I don’t know, four or five months, and most of the time, it’s going to be like two or three weeks. Once you’ve rented a property, you want to be getting in there, using it as a selling space; you don’t want to be sitting on it while you’re spending a fortune refurbishing it. And that applies probably as much—well, more perhaps—to charity retail than to any other retailer. So, I think serving a completion notice is a wholly appropriate thing to do if someone is really dragging their heels, but I don’t think it’s going to affect our members particularly significantly.

I suppose, Morgan, this would affect the hospitality sector more than any other sector. I’m just thinking back to the time when I was working in the hospitality sector, and the turnaround on some refurbishments would sometimes drag out quite a bit. What would be your view on this?

I think, at the same time, these things can drag out, especially if you’re dealing with things like specialised equipment, and it takes a while to source things like that, but the sentiment is the same, that most tenants aren’t going to want to sit on a property. And more often than not, it would just be taking it off the list, having refurbishments done, and putting it back on as soon as possible.

Another thing is that these sorts of things tend to take place in between tenancies, so if it’s a large pub company that owns the building, they might want to get a new tenant in and get trading as soon as possible. So, again, I don’t particularly see it as a huge issue, as the industry does want to keep things moving and continue trading, as mentioned.

Okay. Thinking about NDR multipliers, so the Welsh Government’s proposals for differential multipliers, I imagine, is welcome, so long as that then provides for lower multipliers for smaller businesses, Llŷr. How would you like to see that power used in the future? Would you want to see something like a specific small-business multiplier in the mix? And I’m coming to you, Llŷr, because I haven’t come to you yet.

Yes, that’s fine. Yes, so that’s what we would like to see, because it’s a very clean, very easy way to make sure that different businesses are dealt with according to their needs in general.

I think it’s fair to say at the moment that this would be a power that would have been very useful for the current budget. I think the Welsh Government have put the multiplier cap in there and that spreads a little bit of jam across everybody equally, and that doesn't matter what size business you are. But I would probably say that some businesses, supermarkets and so on, have probably done better in the Christmas trading than many shops in the high street. So, I think that reflects why this power is useful and why it's important for us.

I think there are other ways of looking at it as well, in that we've mentioned high streets needing to try to bring forward incentives to bring people into the centre of town—that should be explored. There need to be impact assessments and it's quite easy, I think, to have unintended consequences with that. So, for example, in Scotland, we know that many small businesses were hit by an attempt to do that because they were wholesalers in industrial areas and that sort of thing. But, I think, having the flexibility to be able to do it by size and location is certainly something to be welcomed and something to be explored. Again, in order to make sure that we do it properly, the processes are really important—the process of impact assessments and the process by which we understand what the tax is for, again, too. I'm flogging a dead horse on that one a little bit, but just to reiterate that as well.

If I can bring you back to the ministerial scrutiny session that we had, on this point, the Minister noted that future proposals could create a tiered system based on business size or business location. How would you respond to that?

Yes, I'd welcome that in terms of a tiered response. It would also—. Again, no system is perfect, and you would need to mitigate some of the effects that are probably known—the known unknowns, if you like—and there will be sectoral differences, the way we measure size, that sort of thing. There’ll be different sized businesses in different sectors—

It's that argument of supermarkets against a local greengrocer, essentially, isn't it?

Yes, exactly, but there are sectoral impacts in terms of businesses and particular sectors that will perhaps be larger or smaller than others. So, there are kinks to that. But I think, on the whole, what we look for is, look at the impact assessment, make sure it’s evidence based, and make sure that we have those processes in place and that we’re clear about what we’re trying to achieve.

Again, if we were looking at this with high streets, you wouldn’t be looking at this by itself, you would need to be also working across Government, if you like—a mission for high streets, if I could put it that way. In terms of the housing side, the unclear elements, you’d need to look at the local authorities and the location, as well as using these powers to support that. And I think the part of the NDR is to be clear on what it's there to achieve within a wider policy strategy.

Great. Diolch, Cadeirydd.

Morgan, you didn't want to add anything at this stage, or did you?

If I could, yes. I mentioned earlier this figure about how Welsh pubs are on average £6,000 worse off than their English counterparts. A lot of that is down to the fact that there are 3,000 pubs in Wales, and 2,700 of them are below what would be the small business multiplier in England, so the £51,000. So, there is a huge, huge portion of pubs that would otherwise be qualifying for the smaller, lower rate multiplier. So, that's one thing to consider. There's a huge opportunity there for pubs across Wales.

And then in terms of specific multipliers for sectors, I think the sector-based opportunity here is perhaps a clean way to do it; it would also allow for rebalancing. As we mentioned earlier, this system is not perfect and a lot of sectors overpay. The hospitality sector in particular, across the UK, contributes 11 per cent of business rates receipts, although it may contribute 3 per cent of eligible income. So, there is a massive imbalance between what is being generated and what's being taxed in the hospitality sector. So, if you could use a specific multiplier based on the sector, it could really rebalance that historic inequality in the rates system, and that would be really valuable.

I would have one small caution on size—putting a specific rate based on size. It could discourage growth, it could discourage expansion, it could discourage just going to that next step in your business, if you're up against the threshold. That's the case with any of these things, but it is one thing to keep in mind.

I wouldn't mind just a quick word. Obviously, it's much more my colleagues' business than it is for us, but I think just looking at it logically and sensibly, it makes sense for another tool to exist by which NDR could be fairer. So, that's definitely true. I would echo some of Morgan's comments that it could create some distortions, potentially, loopholes that people would jump through. They could just pop across the border because it's a little bit cheaper in this area than it is over there. But I think, for us, the key issue again would be one of fairness and transparency: how are these decisions being made? We wouldn't want a situation—and I'm not in any way accusing anyone of doing this—where someone says, 'Well, actually, I quite like that industry, we'll give them a lower multiplier; I don't like this industry very much, so we'll give them a higher multiplier.' On what basis are those kinds of decisions going to be made? I think we would want that to be a very, very transparent system. Those are really the only comments we would make.

Thank you very much for that. Joel James.

Thank you, Chair, and thanks ever so much for coming in this afternoon. I suppose it's up to me, now, to ask the final questions, but I suppose we always save the best till last. I wanted to touch upon something I asked the valuation office earlier. Obviously, the legislation allows for two new duties on businesses: that, in terms of the valuation of their property, if there's something that they believe changes it, they've got to notify the valuation office, and then every year, that they have to fill in more forms. And I know, Morgan, in your written evidence, you expressed some deep concerns about this and the extent to which that has any relevance to the valuation of a property if you're still doing it every three years as well. Can I just get some expansion on that from you, if that's okay?

Yes, of course. This goes back to the way that pubs are valued. I mentioned it earlier, it's called 'fair maintainable trade'. So it is, again, 'What could the average publican generate with this space?' And, as I mentioned, there's the approved guide for pubs that's online. You can look it up, and you can see just the complexities of this. But it's not only based on location and the condition of the building; it's based on your wet and dry split, so how much of your revenue comes from food and how much comes from drinks, the quality of your food and drink, whether or not you have a highly trained chef on staff, do you offer entertainment, do you have an outdoor space that is weatherproof for all seasons. It's all these little things that really come together to create a picture of what this pub could achieve, what this pub could trade. That, then, goes into creating your rateable value, along with your rent and your overall size.

If you don't anticipate your rent and overall size changing, if you're not making any major improvements to the building itself but you are changing those little things that might affect your fair maintainable trade—you're bringing in a particular exciting new beer that people want to try; you're bringing in a new chef, who is going to create a new menu; you're offering an open-mike night or starting a quiz—these things, theoretically, could change your rateable value over time, but these things happen in pubs all the time. These things are constantly changing. It's a really dynamic sector. So, if the VOA asks publicans to use this as yet undeveloped online portal, which is critical to the whole thing, to submit within 60 days any changes that could change your fair maintainable trade, we're talking about a lot of cumulative things here. So, when you still have annual confirmations, when you still have a three-yearly review where you have to submit all of the information, when you have someone come around and look at the pub and actually assess it, it seems like this additional duty to notify with a 60-day time frame is excessive.

On the other side, the VOA has no time obligation on their end to reflect this in any sort of meaningful way. So, they're asking for it within 60 days from all ratepayers, but then there's no actual mirrored obligation for transparency or timeliness from the VOA. So, it does seem that you could ask ratepayers to do a lot of things that eventually would be completely irrelevant by the time it comes to do the valuation.

Thanks ever so much for the clarification there. It was interesting when you said about how the onus seems to be on the business, but not on the valuation office, to have that transparency and that quick turnaround. I was just wondering what Robin and Llŷr think, then, from a charity perspective, and then other small businesses. What sort of impact do you think it might have?

I would completely agree with Morgan. Not this erudite audience, but many people might be very surprised by the complexity that goes into rateable value calculations. I didn't know until I looked at this that if you have air conditioning in your shop, that will significantly affect your valuation. That's fine, and you might say, 'Well, presumably everyone will know when they're installing air conditioning'. Yes, they will, but if they're installing it in part of the shop and not in a different part of the shop, then they're going to have to get their tape measure out and work out which proportion of the shop is being air conditioned. That then needs to be submitted. That changes because they've suddenly found the back room is getting quite hot, so they add a bit, and that changes. So, every five minutes, there's some new thing that needs to be submitted to the valuation office. This is potentially very, very burdensome.

As we've already talked about, and as Morgan mentioned, having an online portal underpinning this with technology could help substantially, but even so, calculating all the various different areas that your shop uses might mitigate your ability to be flexible enough to change that for the relevant customer base that you're talking about. So, we do need to be extremely careful in giving this instruction to make it not burdensome. These people want to spend their time selling stuff to customers, not filling out forms for the valuation office.

In principle, obviously, you need to make sure that the valuations are fair over time, but there's a balance there. Your example of air conditioning reminded me that, during COVID, people were told to make sure they had their fans and so on, and that would have an impact on your rateable value and so on. I think Morgan has made the case for pubs, where changes of style as well as structure can have an impact on this. We've noted that we need to keep the paperwork light and that sort of thing. I think there might be a case here that it might be useful that there is a list of examples of what needs to be done for those—if it's a 60-day thing, that these need to be structural changes. In many ways, we don't want to also disincentivise pubs, for example, from trying new things or from doing that sort of thing. Perhaps that could just be captured in the cycle. So, I think perhaps the onus should be not, 'If there's a change—'. 'If you have these changes' might actually be a clearer way of making it proportionate.

I know that one of the proposals is also to allow the VOA to have civil penalties to almost enforce compliance. I think I can guess your views, but can you just explain if you've got concerns? I suppose you might be supportive of this—I don't know. But just what your views on that would be. Obviously, the VOA have said that they haven't done a policy on it yet, and when that's done, that will provide more clear direction, and there's going to be an element of leniency to it, I suppose. I suppose that means that they will just go after the repeat offenders. But what are your concerns there? I think that's quite a serious direction change and I just wanted to know your views on it.

I think you're right; that is a serious direction change. I think there's potential pain there, not of the NDR payers' own making. If what you find is that there's a huge inefficiency in the system—and we know that there are big inefficiencies in the system, there are big delays in the system here—and if actually, what you're saying is, 'Well, we're going to make you do something you've never done before, we're not going to give you the underpinning technology to do it, it's probably not going to work, the advice and guidance that is available from the valuation office will take three weeks to arrive and they'll never answer the phone'—. These are ifs, I'm not making assertions. All of that kind of stuff could get them caught in a kind of Kafkaesque trap, which says, 'Well, actually, we can't provide this information because there are too many grey areas, the support isn't there for us, and yet we're being bullied into doing it, and if we don't do it we're being threatened with sanctions.' Well, that does feel really rather Kafkaesque, and unnecessarily complex. I guess you have to ask who is it benefiting. You're right; if there are massive repeat offenders and people who are just abusing the system, well maybe there should be some penalties for those. But your average person does not want to abuse this system; they want to get it right for themselves. All we would end up doing is punishing people because they don't have enough time.

If I could just come in as well, there are a few things here. It's sometimes hard to believe because it's 2024, but there are publicans, especially independents and in rural areas, who just don't have access to the internet regularly, and don't have a good enough foundation to be able to submit these things, so any sort of penalties for lack of timeliness or anything like that would be very concerning. As already mentioned, the vague nature of the duty is a huge issue, because again, how do you know that you're supposed to submit something if you just aren't aware that it could fall under the scope? That's another huge issue.

On the duty to notify as a whole, I'll go back to my earlier point. You're asking ratepayers to submit something that does not have any material impact on your rateable value. It's not as if you say, 'Hey, I did all these changes and my rateable value is going to go up' and they're going to put it up immediately after the 60 days. It just goes in a box and sits and waits until the next revaluation. The goal isn't to do mid-cycle revaluations; it's to create a portfolio of knowledge that is meant to help with the revaluation in three years' time, let's say. But again, if you have annual confirmations, if you have a full form and a full revaluation investigation, so to speak, when you do the revaluations, it seems that all these little things would just be collecting dust and causing more work for the VOA for no foreseeable benefit.

Thank you for that. I suppose the concern that I have is when you think about how much pressure businesses are under, and I suppose especially in the pub trade, it's just another element of bureaucracy that makes people think, 'Well, why bother? Why do I need to do this? I just want to sell a product; I don't want to go through the rigmarole of it.' But that's it from me, Chair. Thank you.

Do you want to add anything, Llŷr?

Yes, just quickly. Where there are civil penalties for egregious offences, where that happens repeatedly and knowingly, I think we do want to make sure there is a level playing field and those who are following the law aren't punished because others are not. But I think we've mentioned already how vague, potentially, that law of 60 days is. That makes it very difficult to judge how leniency works, but I think you do need to err on the side of leniency. I guess the other question is, given that we know that the VOA does struggle to come back in a timely fashion with many of these things, as Morgan just mentioned, what's the capacity for enforcement as well. There's that side as well. So, just to raise that.

I know one of the main concerns that was expressed to me—. I used to be a councillor, and so obviously when we had the COVID payments I had quite a lot of businesses in my ward coming to me, trying to get their properties revalued in order to claim the support. It was a nightmare to get hold of the valuation office, and there just wasn't enough turnaround time. A few businesses actually missed out on that support because they couldn't get revalued in time. So, you are quite right.

It feels to me like if this was operating on both sides, so that there was a service level on the VOA as well, which they stuck to, so that you could guarantee to get responses to your questions within a certain timescale, that might help, and that might help sell it to the NDR payers. But if it's entirely one sided—'We want you to do this within this timescale but actually we'll take however long we want to respond'—that doesn't feel fair at all. So, maybe that's an idea: giving them a strict service level, which would have to be enforced.

Thank you, Joel. Thank you very much, Morgan, Robin and Llŷr, for coming in to give evidence to committee this afternoon. You will be sent a transcript to check for factual accuracy in the usual way. Diolch yn fawr.

Our next item today, item 6, is papers to note. We have paper 9, a letter from Cymorth Cymru, which includes updated data relating to the housing support grant, and which we considered as part of our budget scrutiny session with the Minister for Climate Change. Paper 10 is a letter from the Minister for Climate Change, drawing our attention to a recently laid statutory instrument consent memorandum, which, I think, we will probably discuss later on in private session, if Members are content. We previously resolved to move to private session at this stage, so we will now do so.