Finance Committee

So, we'll move on to item 3, which is the financial implications of the Residential Outdoor Education (Wales) Bill. So, this is an evidence session with the Minister and his officials.

Would you be able to introduce yourself and your officials, please, Minister?

Jeremy Miles, Minister for Education and the Welsh Language. I have Emyr Harries, who is responsible for this area within Welsh Government, and Lloyd Hopkin, who is responsible for the curriculum in Welsh Government.

Thank you very much, and thank you for attending this morning.

I wanted to start by looking to explore the background of the Bill and the Welsh Government's view on its objectives. A key aspect of the Bill is the funding arrangements for activity related to residential outdoor education. Can you outline your understanding of these provisions?

Well, there are two main provisions in the Bill, and both of them operate by way of including new sections in the 2021 curriculum legislation. So, the first is in the first section, section 1(2) of the Bill, and that provides a broadly based obligation on the Welsh Government to use all reasonable steps to ensure—which is quite a high burden—that a course of residential outdoor education is provided free of charge, essentially, to pupils in maintained schools. And my understanding of the purpose of that is that it means that provision must be at no cost to the pupil, effectively. And there's a second provision in the Bill, which is in section 2, which provides that Ministers must pay to the local authorities an amount sufficient to cover the costs of residential outdoor education. So, the relationship between the two is not entirely clear, I think, but, on the financial aspects of it, certainly with regard to that second provision, it requires, as I understand it, that the Government pays in full the cost of the provision, in a sense without qualification. So, the scope of that isn't entirely clear in the legislation itself, and I think for that reason it's impossible to properly cost the implications of that, although you can see what the Bill is generally trying to do, in a broad sense.

I think the net effect, if you like, of the two provisions, though, is certainly that this one aspect of the curriculum—and I would say it's a very narrow aspect of a broad curriculum—is given a level of funding, precedence and preference over all other aspects of the curriculum because of this specific funding duty, and there is no precedent for that in the curriculum legislation otherwise.

And because of the funding duty, is that why it would need primary legislation, rather than be added in? Is that—

Essentially. If what the Bill simply, as it were, wants to do—which for policy reasons I also don't think is a good idea, but, from the point of view of your question, if what the Bill simply wants to do is to make an experience of residential outdoor learning a mandatory part of the curriculum, that could be achieved under the existing framework through secondary legislation, through regulations, effectively. If the Bill wants to achieve, as I believe it does, the requirement for that to be mandatory and paid for, then primary legislation is then needed.

And therefore you'd need this Bill to be able to do that, or a similar Bill.

If that is what you were trying to achieve, you would need a Bill.

But you alluded to there that that's not something that you would want to achieve, or it's not a policy aim that you would have.

Well, I—. The short answer to your question is, 'No, I don't want to achieve that', for the following reason. I think outdoor learning is a very, very good thing; I don't think what this Bill seeks to achieve in terms of providing a residential course of a specified number of days is the best way of achieving that outcome.

One of the aspects in this Bill and one of the discussion points within the scrutiny of this Bill has been around what is residential outdoor education, what's the definition. Do you think that has any implications in terms of assessing the resources and funding required to implement the Bill?

Well, I think it does necessarily, because there is a gap at the heart of the Bill in that the purpose of the Bill is not defined in that sense, which I think is highly problematic from a policy point of view, but it's also problematic from a funding point of view, because it's then difficult properly to quantify exactly what is meant. Now, there is an attempt in the Bill, in fairness, for that to be, effectively, defined through a code, which Ministers would issue, and clearly that will help to some extent, but I think it's very difficult to define that with any precision in any case. And I think, in fairness, if you read the explanatory memorandum, different terms are used in different ways, and I think that's just an illustration of how complex it is to define.

Okay. Diolch. Is there an element there, then, when it comes to that definition, that if it was better defined around things like location, whether or not there was a language provision within it—did it need to happen in a bilingual setting rather than somewhere else—? Is that something that would help at all, to help with fleshing out that definition, if you like?

Well, just as a matter of first principle, the more closely defined something is, the easier it is to cost. And some of the points that you just asked about are the sorts of things that the code requires Ministers to provide guidance on. My own view is that it's a broad concept and, however one defines it, it is likely to lead to quite significant levels of variability in the experience that schools choose to commission or provide for their young people, and therefore it's inherently challenging to cost specifically.

You've touched on the mandatory aspect of the Bill, and the guidance

'must provide that residential outdoor education is not compulsory for pupils to attend'.

What's your view on that area and the level of uncertainty it potentially brings to assessing the cost of that element?

Okay. So what the Bill—. The Bill has the effect, and I have no doubt about this, of making residential outdoor education a compulsory part of the curriculum. The Bill then goes on to say that, through guidance, Ministers can address aspects of that, but that doesn't take away from the fundamental principle in the Bill, that it's compulsory. The only way of avoiding participation is through the section 42 mechanism in the 2021 legislation, which exists as an opt-out mechanism, effectively, and, as drafted for the 2021 Act, the assumption was, just because of the way the curriculum is designed and delivered, it would not be used very much, but it's there for when it's needed. My expectation is that it is likely that more people will want to opt out of doing a week-long residential course, for all sorts of reasons—costs being one of them, but others as well—and so I would expect that section 42 mechanism to be used more for this new purpose, if you like. And I think, therefore, it is uncertain. We don't know what level of take-up there will be, so there's another element of doubt that comes as a consequence of that.

Okay. Diolch yn fawr. Peter.

Thank you. Morning, Minister. The Member in charge has suggested that attending residential settings wouldn't require young people to have a great deal of their own equipment and things, you know, the obvious things—waterproofs and wellies and all that sort of thing. Do you have a view on whether this uncosted area is significant in terms of the overall Bill?

I think it's hard to know, in truth. There is an element of uncertainty around what residential outdoor education might involve in a particular context, for a particular school, for a particular group of young people. And I think it is a fair assumption to say that specialist outdoor equipment would be provided by the centre. I'm assuming schools wouldn't choose to go otherwise, from a commonsense point of view. I don't think you can make the same assumption around walking shoes, adequate clothing, a change of waterproofs. Whether that provision is adequate, I think, is very much more speculative.

So, we already have, as you know, the schools essentials grant, which supports children who are eligible for free school meals to pay for the costs of schools uniform, but also some of the kinds of kit that we are talking about here—outdoor clothing and so on—and we've extended that funding quite significantly. And, so, I would expect that that could be used, but I don't think you can say with any certainty that that will cover all the costs that young people would have to bear by taking part in this, which is why, I think, that section 42 exemption might be used more than we currently expect it to be used for the 2021 legislation.

Yes, thanks for that. Just to move on and consider the overall costs of the Bill and its affordability, I wonder what your view was of the overall costs of these proposed changes. Is the regulatory impact assessment an accurate representation of the likely costs that should be estimated?

I think they are, generally speaking, in line with what we think is the case. I don't think we could be confident that those costs are likely to reduce over the coming years, which I think is an assumption in the RIA, because of costs of living generally and the current rate of inflation. So, I don't think that is a safe assumption, but from a top-line point of view, they're broadly in line. I do think these costs are completely unaffordable in the current climate, to be clear, but I do think that the way they've been described is fair.

Yes.

Peter, before you go on, I think Rhianon would like to come in on that point.

Oh, sorry, Rhianon.

Rhianon.

Thank you very much, Chair. On that particular point, obviously, the principles that are behind this Bill, we're very cognisant of. I mean, pushing up to £100 million, is there any concern or fear that this would create, in a sense, an internal market, and therefore prices would be pushed up? Is there any commentary around that? And, as a second, if I may at some point—if nobody else picks this up, Chair—it was just, really, a question around Estyn inspections. Is there any planning in the Bill for any costings around that? I don't know if the Minister can take any of those.

I might ask one of my colleagues about the cost of Estyn inspections. I don't think that is the case, but I'll turn to them for that.

On the question of whether it will create more of a demand, I expect that is a possibility. I think it's quite hard to know, in truth, whether that will play out, if you like, but I think my main message is that I think the costings at a top-line level are broadly in line with what we think is a reasonable position.

I mean—

Oh, sorry, with regard to the Estyn element, was there—?

No, we don't think the Estyn costs are included in there for inspection.

Okay, thank you.

Fine. So, can I just ask, then, as a supplementary to that—and the Chair will probably tell me off because it's not necessarily financial—in terms of outdoor activity centres, could somebody just give me a brief piece of information in terms of how they are inspected?

There's a licensing regime, isn't there?

Yes.

We can—. From a policy point of view, we can provide some further information.

That would be great. Thank you very much.

Thank you.

Peter.

I'm conscious that you believe that the Bill just simply isn't affordable, and I know Sam Rowlands would say that it's a matter of priorities. I don't know how you would respond to that, and I'm conscious that you just said that the value of outdoor education is so important. As somebody who was a massive advocate and my authority were still retaining it, I know the benefits of it. So, if not this, how do we fund sustainable access to outdoor education that is uniformly spread across Wales and gives all children the opportunity? Are there current systems that can enable you to meet that aspiration?

Well, I do accept that it is a matter of priorities, there's no question about that. My point, I think, is that there are other things that have a prior call on Government funding, which is under incredible pressure. So, if you were to say to me, 'If the Bill is passed, where would you find the money?', I would have to find it from the grants we provide to schools on standards, the grants we provide to schools to make them more equitable places, the grants we provide to support our reform programme, the grants we provide for our 'Cymraeg 2050'. There is one pot of money. I'm a big fan, just to be clear, as I've made very clear to other committees, of outdoor learning and, specifically, of residential outdoor centres. They do incredible work. I just think that expecting a legislative statutory duty to be funded in the current climate is not the most pressing call on school budgets, I'm afraid to say.

No. Would you say that schools have the resources, though, to be able to do this without this legislation then? Have they got the resources? I'm just conscious that there will be many children who aren't able to access this, and might not be able to afford, as a family, to be able to do it. I'm just trying to think of equality.

Well, because of my point about funding pressures, I don't believe schools are in a position to fund from their current budgets the level of duty that this Bill creates, and that's why the Bill asks me to find the additional money for schools.

Yes.

My broader point, which is a policy point, not a finance point, but it may be useful for this discussion, is that I don't think this is the only way that the curriculum can achieve the objectives of making sure that young people get access to outdoor learning, and there are other ways, which schools certainly do have the funding for, that can deliver that outcome.

I think that's clear. Thank you for that. The RIA makes a number of assumptions and uses a variety of data sources, including those maintained by the Welsh Government. Are you concerned by any of the assumptions, and do you think the data used to prepare the calculations draws on appropriate sources?

I think so. I don't have any particular concerns on the data sources that are being used.

Okey-doke.

There are some assumptions. The RIA makes assumptions about the kinds of costs that are included within the duty, effectively. Staffing costs is one example, but there are others as well, and I don't think they fully capture the range of costs. But in so far as they're on the face of the RIA, I think the data sources don't concern me.

That's helpful. Last couple of questions from me. In your response, you suggest it's risky to commit to forecast costings with no indicative budgets. Why is this a particular issue to highlight in terms of the Bill?

Well, it's the current financial climate, I think. We are at a point where—

Yes, but often with legislation—I know through some legislation I brought forward—it's very difficult to be able to always identify, and I know we'll look at a Bill perhaps later on today where there would be ambiguity around costs and things like that. I just wondered if, perhaps—. I've lost my thread now.

I do accept the point you're making: it is sometimes challenging to be specific. Needless to say, the point I'm making is, when you're working in a climate when budgets are under such incredible pressure, that becomes more of an issue.

Yes.

Mike wanted to come in on that.

Why is it true of this Bill, and not other Bills? There's a very good argument for the Government not to bring any Bills forward that actually have a net cost to the Welsh Government. It's an argument I might put forward. It's one that you would definitely oppose and the Welsh Government would oppose. But why is this Bill different to any other Bills? Whether it's good or not is a matter for further debate somewhere else, but if it's going to cost money, which it is, why is there a problem with this Bill, but there's not a problem with a whole range of other Government Bills, which also cost money, and that has to come out of the same, as you put it, pot?

Yes, Mike, that's what I was trying to get to.

Well, there are two aspects to that: firstly, because the particular pressures on budgets now require us to have a clearer sense of what the future implications of legislation might be. I do accept the point you're making that you could use that test against other Bills in the programme. I would say to you, when you've got a Bill that delivers on a matter of policy that has, if you like, a greater priority, then you might be prepared to take a different approach in relation to that, but when you've got the mix of the funding climate on the one hand and a new, novel and unique, really, level of obligation to fund one part of the curriculum over another, I think the net effect of that is that you'd need to have more certainty than we've got.

You say that's unique. If that's unique, what about the pupil deprivation grant? It's the same sort of thing; it's open-ended, you don't know how much you're going to pay out any year absolutely. Why is it different?

It's different because this is related to one part of the curriculum, and I'm setting it in the context of the curriculum, and this Bill creates an obligation for Ministers to fund residential outdoor provision in a very specific way, but doesn't, for example, provide an obligation on Ministers to fund science teaching or maths teaching. My point to you is that I would struggle to prioritise in that way, and I'm sure most people would.

On—

Yes, carry on.

One additional point. One little point: I just wondered if you think inflation is a specific concern within the RIA. I know your evidence pointed to some concerns.

Yes, I do. I think the costs over the next five years are likely to be—. They're not likely to be going down, are they?

Okay. Thank you.

Mike.

Sorry about earlier. The RIA does not include any monetised benefits, but it does say that there are potential social and economic benefits to outdoor education. What is your view on those benefits, and are you concerned that there are no monetised benefits?

Well, I do think there are significant benefits. I think time spent outdoors is very good for young people's learning; it's good for mental health and well-being; it's also good for understanding the connections between people and nature; it's good for learning and emotional and cognitive development. So, I think those benefits are clear. They can be delivered by outdoor learning in ways other than residential outdoor centres. The RIA talks about a provision in the social return on investment. I'll see if I can find it, actually, the social return on investment analysis. Give me one second. It's paragraph 214. So, it talks about a study by Social Value Business on the social and economic benefits of learning outside the classroom, and I think that is good evidence, but that review and report does not, in fact, include residential outdoor learning; it's a review of outdoor learning more broadly than that, but I think it's good evidence of the benefits of that.

Just on that point, you're saying that having this as a statutory, mandatory element within schools is difficult for the reasons that you've given, and you mentioned earlier that there are other ways of doing this, and that that's occurring, and in your answer to Peter you were saying that there are ways that schools are delivering some of this in contexts like residential visits. They come here to the Senedd, and they stay in the Urdd across the road, and that sort of element. Can you elaborate a little bit on how those elements are funded currently, especially for those who are really struggling and from communities that I represent where they would struggle to be able to afford to go to—? I think that probably gets to the crux of what this Bill is trying to do: it's trying to make it available to the people with the least, and that equity in being able to do that. So, can you talk a little bit about how you fund that currently?

Well, that's funded directly from delegated school budgets, but schools will also be using the pupil deprivation grant, and families themselves, those who are eligible, will be able to access the schools essentials grant to pay for some of those costs. I am absolutely not making the case that school budgets are sufficient to cover the level of obligation in this Bill—I don't think that they are—but that will be the mix of sources that schools will be using to cover current provision. And I'm absolutely minded, sighted, on the argument in relation to equity, and I feel it very powerfully. The challenge that I have as a Minister is finding another source of funding that would be able to meet that additional cost and, actually, the sources of funding that it would come from are themselves grants that are there, very often, to address other issues of inequity in schools. So, these are not straightforward choices between good things, palatable choices and unpalatable choices, they are unpalatable choices all round.

Okay, thank you.

Before I move on, of course, we've got the forest schools initiative, which is incredibly good, and two schools I chair the governors of are both very much involved in that, where they actually provide the equipment—there's a means by which the parent teacher association provides the equipment.

But moving on to costs, broadly speaking, the RIA identified costs associated with attending the centres, transport and teachers' cover. Is there anything missing?

Well, I think the costs, as they're described, are broadly in line with our understanding. I do think that the staffing implications of a mandatory provision are not fully explored in the RIA, for the simple reason that my expectation is that, currently, schools will ask for volunteers—you know, teachers to volunteer—to go on residential outdoor provision, and that happens. If you're creating a mandatory regime, I think you're going well beyond asking for volunteers, and I expect you would need to make changes to the relevant staff contracts, which could have quite a considerable additional expense.

Finally from me: the RIA makes assumptions about pupil numbers and the cost of a visit, among other things, and it also, similarly, calculates transport costs. Do you have any comment on whether those figures are reasonable or not?

Well, on the staffing elements of that, I think you would need to—as I was just saying in passing now—review the schoolteachers’ pay and conditions document, which has a maximum number of hours worked, and I'm sure that would have a cost implication. There'd be advice to Ministers in relation to that from the independent peer-review body, but my expectation is that that would have costs, certainly, and conceivably considerable costs.

Thank you, Mike. I'll bring Rhianon Passmore in. Thank you.

Thank you very much. I think we've touched upon teachers attending visits in the previous question, but I'll just reiterate: stakeholders have noticed that this is—and we've mentioned ourselves—currently done on a voluntary basis, but the Bill, obviously, is likely to result in a change to teachers' pay and conditions, and you also just mentioned this. So, in terms of that as a risk, and also in terms of, if this happened, obviously with preparation, next term, what is the risk of such change in terms of the impact on staffing costs? What's your best guess?

Well, I'm not in a position to provide an estimate of it; I think that's an illustration of the inherent uncertainty in it. I think they could vary quite substantially, so it's difficult to know what the additional staffing implications would be. But supervising pupils on a week residential would ordinarily be outside normal requirements for teachers, so my anticipation is that, at scale, there would need to be a change, and that would be negotiated. The mechanism is that this is a negotiated set of changes that then take effect through secondary legislation, which I lay in the Senedd. So, the implications of that set of changes could be better described, at that point, but then how that applies in practice, in schools making choices and decisions around the level of provision, is inherently uncertain, I think.

Thank you. And there are obviously another set of questions not for this committee around the capacity of the workforce in that regard.

I'm going to move on: the RIA discusses tracking individual pupils' participation in the residential outdoor education proposals, and it suggests that this would require the updating of the database, and the LEA associated costs, therefore, are considered within this as negligible and are not included. Do you see there's a need for additional resource implications in this area, because, obviously, in terms of that tracking, that's very important?

Well, I think there are two parts to that question. So, firstly, in order to track and measure whether every pupil had at least been offered residential outdoor education, we would need to collect that information from schools. We would need to amend regulations in order for the Welsh Government to be able to do that. In practice, it's more likely that what we would do is amend the regulations for local authorities to capture that data, and then we have an existing mechanism for having that shared with us as a Government. So, in practice, that is how we would do it, that's how we would introduce a monitoring regime. I don't think the costs of changing the regulations are particularly significant. However, you ended your previous question talking about the implications from a staff workload point of view, and I do think you would expect to see a new—. There would be administrative burdens, wouldn't there, on schools and on local authorities of that level of monitoring, and I don't think you could say they would necessarily be negligible. And just to make the broader point: no single teaching intervention anywhere else in the curriculum is subject to that level of reporting. So, this would be unique in that sense.

Just on that point—and maybe I should have declared it at the beginning, as a governor of a school—are there any implications on resourcing, especially around the data and the information that comes to governing bodies? Is there any financial implication there on resourcing when it comes to supporting those bodies, or conversely, I suppose, releasing some of the pressure—if this was mandated and put through as something that the Government were funding—releasing some of the work of the parent teacher associations, raising money to help other things? Would there be anything there? I don't know.

Well, what I'm really referring to in my answer is staff time, isn't it? That's what it boils down to: staff time in compiling the information, making sure it's reported. So, in a sense, it's hard to quantify that, but it obviously does have a cost, certainly, I would imagine, from a senior leadership perspective. The incremental costs of reporting that to the governing body, I imagine, are negligible, but that will be an extra thing for schools to have to do.

Thank you. Diolch, Rhianon. Can we just unmute Rhianon, please? Thank you. Oh, hang on. There we are—go for it.

The problem comes when I unmute and you unmute at the same time. [Laughter.]

So, my final question, then, in regard to the RIA: the RIA does not include a post-implementation review; what monitoring expectations and requirements would the Welsh Government anticipate with this Bill as it is, and are there any resource implications to those activities?

Well, from a curriculum perspective, we have a number of ways in which we will evaluate the implementation of the curriculum, progressively into the future. So, there's a formative evaluation of the curriculum itself, and, in time, as the curriculum is rolled out, progressively, there'll be more and more monitoring of learners' progress nationally. So, that is part of the existing set of arrangements for curriculum monitoring. However, those are understandably broadly based. So, that is around the whole curriculum as it's implemented over time—that's the level of monitoring. So, the kinds of things that we will monitor are: are learning standards improving over time; is the way the curriculum is being rolled out supporting progression; what further support might be needed? So, those kinds of questions. Because of the specificity of this one intervention, there isn't really any precedent for that in how we would monitor that as part of the curriculum, so it would need to be designed afresh, if you like, and, again, just as I was saying earlier, I think that would require a disproportionate level of resource for one quite narrow, specific intervention as part of the curriculum.

Thank you. And can I just ask finally, Minister, do you foresee any other potential transitional costs, were the legislation to be implemented?

Nothing additional to what we've set out in the evidence paper, I don't think.

Okay. Diolch. Thank you, Chair.

Diolch yn fawr. Any other questions from Members? No.

Thank you very much for your time.

Thank you very much for your time this morning. We'll obviously have a transcript ready for you, to check for accuracy. We'll go into a short break now, and reconvene at 11.15 a.m. Thank you.

Diolch yn fawr.

Diolch yn fawr iawn.

Welcome back to this meeting of the Finance Committee. We're now going on to item 4.

We'll go on to item 4, which is the financial implications of the Local Government Finance (Wales) Bill. We've got an evidence session this morning with the Minister and her officials. Would you introduce yourself and your officials, please? Thank you.

Yes. Rebecca Evans, Minister for Finance and Local Government. And I'll ask officials to introduce themselves.

Ben Crudge, head of local taxation policy.

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

Fantastic. Thank you very much. And thanks for making time to come to committee this morning. We've got you for an hour or so, hopefully, to go through this Bill. I'd like to start by exploring the background of the Bill, what part it plays in Welsh Government's broader objectives for local taxes, and engagement with key stakeholders on the related costs. Can you start by providing an outline of what the Bill does and why it's being introduced now?

The Bill contributes to that wider programme of reform. It's not the entire reform on its own, but it's part of our work in terms of making local government finance more modern and bringing it all up to date. But the provisions in the Bill itself are really about bringing in specific improvements to better enable Welsh Ministers and local authorities to respond to changing circumstances and, potentially, to changing priorities in the future. They've been carefully constructed to try and create the fairest possible situation, and fairness, as you know, is part of our overarching approach to the council tax reform, but it absolutely holds true to non-domestic rates as well.

I think one of the key aspects of the Bill, really, is about introducing more frequent revaluations for both non-domestic rates and council tax, bringing things up to date and still having a stable system, but also one that reflects the true value of properties and the shape of the tax base.

The changes to the current legislative framework, of course, were made even before devolution. We've got a system that is very, very old in terms of local government finance, so this really is our opportunity to bring things into the modern day and create a system that is flexible also to respond to changes in the future.

What are the highlights, then? Revaluation is one of the highlights on council tax and on non-domestic rates. Are there other things within there that are key objectives of this?

I suppose another really key part of the Bill is enabling Ministers to alter the reliefs, exemptions, discounts and premiums in the future as well, and I think that's a really core part of the Bill. There are other aspects as well, which are smaller. The phrase 'severely mentally impaired', for example, is used for one of the discounts at the moment. That's just a horrible phrase and we wanted to take the first opportunity that we could to change that, so that's in the Bill as well. It's a range, really, of things that are modern, but then taking the opportunity to make some early changes to some of these things as well.

Thank you very much. The total net costs associated with the Bill are around £60 million, but much of the Bill has not been costed as the activity will be taken forward via secondary legislation. Are you able to provide further information on the potential financial implications of any changes within that secondary legislation and whether there are any areas that could result in significant costs, beyond what's set out in the RIA?

We're not able to provide that detail at the moment, because the proposals for how the secondary legislation would be used, and the kind of reliefs, for example, which would be potentially introduced in future haven't been set out. But that said, of course, those regulations would be subject to their own RIAs and their own work in terms of developing and identifying the costings and so on, and communicating that, and consultation where necessary as well. I suppose that's the next step for reform, whereas this immediate step is about creating the structures to enable those final changes to take place in the future, subject to consultation, where appropriate, and also the RIAs and so on.

As we see with a lot of framework Bills, it creates that financial uncertainty, especially for this committee to understand the overall cost of Bills. So, it's always going to be a little bit of a concern for this committee that we don't know exactly what's going to be spent. Are there any elements within that secondary—? Is there anything that's particularly going to be a significant cost, or are you confident that any future Bills or any future secondary legislation will be looked into in enough depth for this Senedd and this committee to understand the cost implications?

Because impact assessments are so important for secondary legislation, I think that that will be an important point at which you can set out in greater detail the impacts. I suppose it is difficult at the moment. Take multipliers, for example. The Bill will, in future, allow a Government to make different choices on multipliers. At the moment, we only have the one multiplier that we are able to vary in Wales, but, in future, there could be regulations brought in or subordinate legislation brought in whereby you could change on the basis of location, on classification of the property, for example, but you can't do that at the moment. So, depending on what choices are made in that space, it will obviously have an impact in terms of any costs. To what extent we require local authorities to make changes to their software would again be subject to future costings as well. So, those are the kinds of areas that we're looking at, but I'll just pause and see if Ben has got anything to add.

I think it might be worth mentioning that we have committed to a review of reliefs and exemptions following this Bill, and that will allow us to look at all the reliefs and exemptions that are currently in place on the non-domestic rates side. We're doing similar work on the council tax side. Following that piece of work, we'll have more clarity and recommendations, potentially, on what the next steps would be with the powers. And, as the Minister says, that would fully consider the financial impact of any changes that we're proposing in that space.

And on the council tax side, it's worth mentioning as well that we've got a working group looking at the 53 different exemptions, and so on, that we have at the moment. So, they'll be making recommendations as to whether any of those are changed or removed, or if there are new ones that we could add. So, again, responding to that kind of detailed work will be a next step down the road as well.

So, this Bill is designed, really, to give you the flexibility to be able to adapt taxes as it goes along, and to be able to have more flexibility in varying different aspects for the Welsh taxpayer, if you like, and probably diverge more from what's happening over the border.

Yes, exactly, because at the moment, actually, we don't have, in many cases, the power to do various things. I think it's 11 different occasions we've relied on the UK Government to make changes through its legislation that we deemed to be necessary here in Wales. So, it really is about creating a system that brings back the decision making, really, if you like, to the Senedd on these points, and allows the system in future to be much more reactive to the Wales-specific context as well.

You've talked about reform of local taxes at various points through this and the last Senedd. This has included exploration of different systems, such as land value tax. To what extent does this Bill represent the extent of the Welsh Government's ambition in terms of business rates and council tax, or is this, as you've alluded to, a step on the way to other changes?

I would say the Bill contributes to the reform of non-domestic rates and council tax, but it's certainly not the whole story. You'll be familiar with our phase 2 consultation, which closed yesterday. So, we'll be considering the responses to that consultation in terms of the way forward. The things that we've looked at in that have been the scale and the pace of reform for council tax. None of that requires this Bill to enable us to undertake, for example, a revaluation or make some of those changes, but it's very much alongside this, and this will futureproof that kind of work and allow us to adapt in future as well.

You mentioned the land value tax. Again, this Bill doesn't prevent any of that work taking place, and in fact it's something that we're actively exploring at the moment. I did say previously that I would be able to set out some kind of road map for consideration and so on before the end of this Senedd term, and we’re currently working on that as well at the moment. So, this doesn’t stop any of that work happening, but land value tax, if it is demonstrably better than non-domestic rates, for example, or even council tax, would take an awfully long time to implement. So, we’re just exploring that whilst concentrating on these immediate changes.

But looking at the explanatory memorandum and the RIA, it contains a 10-year costing. Has any of that future work been thought about when looking at future costs? Have some assumptions been made about down the line? You're talking about taxes that might possibly develop. How is that linked in to some of the costings in the RIA, or have you just thought about the linear approach of if this Bill just happened in isolation? Do you understand what I'm getting at?

Yes, I do. I might ask Simon or Ben to reflect on that. But I would just add as well that the work that Bangor University did for us was really useful in terms of setting out what the next steps might look like. And then we're also looking to engage with a postgraduate PhD student—

A fellow.

—a fellow, in fact—to help us with this work as well, and to kind of help us at this point grapple with the questions that we need to answer to go further down this road.

On the question of whether the RIA takes account of potential land value tax changes in the 10-year window, it doesn't. It looks at the council tax and NDR system and the reforms that are presented in the legislation without making any assumptions about what land value tax may look like in the future.

Thank you for that. Finally from me, much of the cost identified in the RIA is associated with activities undertaken by other bodies, like the Valuation Office Agency, the Valuation Tribunal for Wales and local authorities. Are you satisfied with the engagement undertaken with those bodies on costs, particularly as you only had six local authorities respond to your call for information?

Yes, I am satisfied. I know that the VOA gave evidence to the Local Government and Housing Committee very recently, and in their evidence they were also satisfied with our assessments of the costs in the RIA as well. Engagement has gone far beyond the response of those six local authorities. Officials are engaging all the time with the VOA, the VTW, local authorities and so on. I don't know if you want to add a bit more, perhaps, about the data gathering exercise that we undertook.

The data gathering exercise was an exercise that was happening to look at the numbers and have some numbers for the RIA. We went to all local authorities and got the response that we got, which we thought on balance is a fair reflection of what the whole of Wales looks like for this exercise. But aside from that, we also had regular engagement with local authorities through revenue and benefits, the Society of Welsh Treasurers, and various other engagement sessions, where these numbers have been socialised, and they haven't come to us with any objections to them at this stage.

And I've met with local government leaders, local government finance leads, on a number of occasions as we've moved on this local government finance reform journey, and also had discussions through the finance sub-group as well. So I feel that we're engaging well and are very open to discussions with all of these partners.

And they're quite receptive to this Bill and supportive of it.

Yes, the response has been positive. I think they see the benefits, really, in terms of the things that we're trying to achieve. When you think about the work that we're doing to move properties more quickly back onto the ratings list if they've been off because of renovations, for example, that could benefit local authorities by having those properties back on the rating list, paying their taxes more quickly. So, practical things that we're doing to try and improve this system, as well as the bigger items of the reform, have been well received as well.

Thank you very much. I'll bring Rhianon in at that point, please.

Thank you very much, Chair. Minister, you've estimated an increase in costs of around £6.3 to £10 million for moving to more regular business rates revaluations, and I think that's mostly with the Valuation Office Agency costs. With similar changes happening across the UK, firstly, how are you maximising the economies of scale? And secondly, if this Bill is not implemented, in regard to the risk of Wales falling out sync with cycles across the UK, what do you feel the potential cost is of maintaining the current system?

I should just add at the start that the increase in costs of around £6.3 million, which you described, is over 10 years, so just to be clear on that—

Sorry, yes.

—in terms of moving to the more regular revaluations.

The VOA will be delivering the revaluations for both England and Wales, and that's part of a joint programme, so that will allow us to benefit from those economies of scale and the administrative effectiveness that the VOA provides, in terms of the services across both England and Wales. We think the costs are justifiable in light of the balance that three-year revaluations provide to ratepayers, in giving them a degree of certainty whilst also, then, having a system that reflects the more up-to-date economic environment.

If the Bill isn't implemented, there'll be no non-domestic rates revaluation for Wales in 2026 and the next would take place in 2028, so that would be out of sync a bit with England. Then, we'd have to look again at the cost profiles, bearing in mind, then, that we wouldn't benefit from that kind of economy of scale that Rhianon Passmore was talking about, so we'd have to, I suppose, explore with the VOA a revised cost profile.

Okay, thank you. Moving to a more frequent valuation, will that mean more additional costs to ratepayers if the circumstances of those ratepayers are changing more frequently and if their rateable value changes more frequently—so, for example, in terms of more regularly needing to check or understand eligibility for reliefs?

As I say, I think the three-yearly revaluations do provide that balance that ratepayers tell us that they want as well, in terms of the certainty and the up-to-date reflection of the circumstances. The change in itself won't create any additional costs for ratepayers overall; they would only occur if the revaluation of the tax base meant that the individual property attracted a higher rateable value. We haven't quantified those costs, because we won't know what they are until the revaluation has taken place, but, importantly, the exercise would be revenue neutral across the tax base, so I think, again, that's something that's important to reflect on.

And then, just to add, of course, that most non-domestic rates reliefs are automatically applied by the billing authority, so ratepayers don't need to apply for those. So, I think, again, that will not provide any additional costs, and that includes updating eligibility and entitlement as part of routine billing adjustments, which the local authorities undertake as well. So, we wouldn't expect those more frequent revaluations to have a burdensome effect on businesses.

Okay, thank you. You've identified additional costs to local authorities of the more regular cycle around revaluations of around about, I think, £311,000 over the appraisal period; I think those are down as opportunity costs. Will, then, the Welsh Government fund those opportunity costs and on what basis have you assumed that no additional staff will be required?

Revaluations will result in those altered liabilities for ratepayers, with local authorities being required to update their billing systems to implement a new ratings list. But local authorities are already required to undertake the billing activity on an annual basis anyway, so, in that sense, we wouldn't expect there to be significant additional costs. Local authorities, in the discussions that we've had with them, also suggest that any changes, really, would be related to the information technology systems and, also, a small amount of additional engagement that they might have to undertake with ratepayers. So, we think that a small amount of additional activity could be incorporated within the existing administration costs. I think that local authorities have recognised that in our discussions with them. They haven't had any undue concerns in this space, because, in a sense, it's doing the work that they currently do, but in a kind of more modern and beneficial way.

Thank you. So, my final question—. Before I go to that, there are some little discrepancies, which we can write to you with, in terms of some inconsistencies around compliance activities, but I'm not going to do that now. So, to facilitate regular revaluations, ratepayers will be required to proactively supply information to the Valuation Office Agency, the VOA, and make an annual confirmation. The estimate is a total cost of £14.875 million over the 10-year appraisal period. What evidence do you have then, Minister, that this represents value for money for taxpayers?

We think that the cost of compliance is very modest on an annual basis, and also in terms of that individual ratepayer level. And it does relate to the time that it would take for the initial familiarisation with the new system and then that annual engagement to provide the necessary information or provide updates.

For the individual ratepayer, we estimate costs to be £35 in the first year and £20 per year thereafter. That's only slightly higher than the £15 that we currently estimate the annual cost to be for them to provide the existing information. So, we think that that's proportionate to the overall system and the benefits of the requirements in terms of ensuring that the whole system is up to date as well. But I'll just see if there are any further reflections from officials on that.

It might be worth just adding that these numbers—the £35, the £20, the £15—they come from the Valuation Office Agency, who will be operating the duty-to-notify work. So, we've taken that and extrapolated it on the number of ratepayers that we are engaging with to come to the figures, and it's £15 million every 10 years.

In the local government committee this morning, or earlier this morning, we had a good discussion about the requirements that already exist on businesses, and how what we're trying to do at the moment is just improve the system, rather than put any new burdens on businesses. But did you want to just say a little bit more about that, because that was useful?

Yes. I think it's useful just to note that revaluations already happen in the NDR space; there was one in 2017 and there was one in 2023. Ratepayers were engaged with that and had to supply information for that process in the traditional, current way. What this is doing is not changing the fact that ratepayers will be engaging with the Valuation Office Agency at revaluation stages; the VOA are looking at changing the process to make it easier to engage on a more frequent basis to be able to deliver three-yearly revaluations. So, we're not starting from nothing to something, we're going from somewhere where we already are to a different place. So, it's important to put that context in.

And we want to make the system as straightforward as possible and as easy to use for businesses as well. So, I know the VOA will be keen to find the right way to make a system that is easy to use. We want to create minimal burden, really, for businesses in that space, and we won't require businesses to use that system until we're absolutely confident that it will be up and running for businesses, which we wouldn't expect to be, actually, for the 2026 revaluation, it would be the one following that, and that was always our intention as well.

Okay.

Would the new system or this Bill enable you to be innovative with regard to other businesses? For example, in the budget debate yesterday, we were talking about the potential for looking at bigger, multinational companies and the difference between those and local high street shops. Will it give you some flexibility to be able to make some of the taxation that you're able to use a bit more progressive, or is this beyond the scope of this Bill?

I'll ask Ben to reflect on how the secondary legislation could be used in that space, but I think one of the contributions in the debate that was really powerful yesterday was from Luke Fletcher, and he was asking about the multiplier and what we could do differently at the moment. But, at the moment, we can't do anything differently, in the sense that we just have that one multiplier. So, you can change the multiplier, but only for all of the businesses. So, we could, in future, look—. But it would have to be something for which we have data. So, we've got the data on the location, we've got data on the business classification, so you could have potentially different multipliers in that space as well. But it would have to be something that has fact, a data fact, attached to it as well.

I guess just to add that the fundamentals of the tax is to get the valuation of a property before you start layering on, and how that impacts, then, through reliefs and multipliers et cetera. So, the process that the valuation office are looking at here is to get the best, most accurate valuation for each property, and, therefore, you can talk about the taxation following that, if you're going to layer on a relief or a different multiplier.

But that would come through the—. So, that wouldn't be on the face of the Bill, that would be what would come later.

In the secondary legislation.

Yes.

But it would be a potential benefit of this Bill to enable you to be able to do that kind of thing—

Yes.

—down the line. I know Mike wants to come in on this question.

On NDR, you have two things. Big businesses don't like NDR; you can't avoid it. Corporation tax is an optional payment, they decide how much they want to pay, and then they get the calculations to work it out. That's why you see—you only have to check—Google, Amazon, pay very, very little corporation tax year on year, because there are all sorts of ways, legally—I'm not saying they've done anything illegal—to avoid making a profit in any one country. If you move the buildings, you don't have them there. The question I'm going to ask on the top of that, though, is on car parking. Are you going to examine actually treating car parking as part of non-domestic rates, which would balance out between both the very large companies who have big car parks associated with them, the out-of-town shopping, I think, is the technical term—those—to balance it out against in-town shopping, who don't have any car parking and those of us who use it either use our bus pass or pay for the bus journey?

So, we're discussing what might be possible.

Will you look at it?

Yes. We certainly—

That's all I'm asking you to do.

But also the contribution reminded me of another important part of the Bill, and that is around avoidance. So, we've been doing lots of work recently to tackle avoidance in a number of ways, but this Bill will help us do more of that in future and look to those avoidance schemes that are creative—they pop up all of the time in different ways—to enable us to respond to that in a more agile way. It specifically includes some work in relation to charitable rate relief. We know that there are avoidance schemes in that space, so we're able to take some action on that in this Bill. But then it also paves the way for us to be more agile in future in terms of shutting down those opportunities.

Rhianon, have you got any further questions, or—?

Sorry, in terms of the online VOA system, in terms of the robustness of those figures, perhaps we can write with the other figure question to the Minister on that. Thank you.

Okay, thank you, Rhianon. Peter.

Yes, thank you. Morning, Minister. You just talked about avoidance, and I know there's an estimated potential benefit of about £1 million a year associated with the changes to avoidance activity linked to the charitable rate relief. You haven't costed the new compliance activity, and I just wondered what you were expecting of local authorities and taxpayers and why you wouldn't have costed that.

There's already an administrative requirement on both businesses and local authorities in the existing system, in the sense that empty property relief for charities does require the ratepayer to make an application for it, and it also requires the local authority to process that application. But what we do know is that the system at the moment is being exploited for avoidance purposes. So, we wouldn't see any potential additional cost. What you might see, actually, is a reduction in the number of businesses applying for that relief, because they know that they might not be truly eligible for it.

In terms of the requirements of businesses, that would be around providing an annual report and accounts information, but these are things that genuine businesses should be able to provide in any case, and we're also providing local authorities with a level of discretion as well, because they will know the true charitable organisations working locally. So, we're trying to make the system as reasonable as possible whilst also closing down those opportunities for it to be abused.

Thanks for that. You also don't estimate the compliance costs associated with the changes to how completion notices can be used. What new activity will this change require?

We think it's relatively marginal in its scope in terms of the requirements of new activities. It's really about addressing a gap that exists in the existing system with the existing activities. So, I think that that is—. We wouldn't expect for charitable relief for there to be any particular additional costs. I don't know, Ben, if you want to—.

Yes. So, for the completion notices, the extra cost is, we've kind of guessed, between £20 million to £100 million in our estimates. What we weren't able to do is work out how many, because it varies significantly year on year. So, these are properties that are taken off the valuation lists to be refurbished and then put back onto the list. That obviously varies year to year. From discussions with local authorities, it's very marginal in terms of the numbers that this happens to, but what it will do is it will allow local authorities to officially put these properties back on the list as soon as they can, which will increase, obviously, the NDR take for that local authority, which is a positive for tax collection.

Yes, yes.

Apologies, I thought you were talking about charitable rate relief.

No worries. No, thank you for that. That was helpful.

Moving on, the RIA talks about £10 million to £20 million in NDR lost due to avoidance. As we've talked about also, the Bill introduces that general anti-avoidance rule, with the detailed changes to be set out in secondary legislation. What are your expectations around how you will use those powers, and what might be the impact on revenues through doing so?

Well, we want to reduce those opportunities for avoidance, because, obviously, it has an impact on the overall funding available for public services and so on, and people might be taking advantage or creating schemes whereby they are abusing the current system. So, we do want to address that, but it's hard to be specific, because, of course, those techniques to avoid tax are constantly evolving. So, what we need to be able to do is respond in an agile way to address whatever specific behaviour is identified at that particular time.

So, local authorities have estimated that the scale of non-domestic rates relief is, as you say, between £10 million and £20 million. That's about 1 per cent to 2 per cent of NDR rates revenue, so we hope that these provisions, as well as those provisions that we've introduced in recent years, will help to make a considerable dent, really, in that figure.

When we make regulations to identify those specific behaviours, the impact on revenues, of course, will depend entirely on what the behaviours are, and the extent of the behaviours. So, it's hard to say at the moment, but what this does is give us a chance to address those things quickly in future.

Casting our minds back to the tax Acts and—we discussed this a lot in detail then—the general avoidance regulations, where does that dovetail into some of the work here? Does it add to it, or are we re-legislating for something that we've already got, or just making reference to it? How does it come together?

So, this is separate. This is for the NDR system, and this is looking at general anti-avoidance regulation and powers for this specific tax. I think what you were referring to was to do with the land transaction tax and the devolved taxes. So, this is a separate one in the same vein, in the same kind of thought that we want to be nimble and agile in this space. So, it complements it.

So, it's complementing it, rather than subverting it or adding to it.

No, it's addressing a similar issue, but for the local tax system, rather than the Welsh taxes.

Okay. Thank you. Peter.

Thank you. You include a financial benefit to ratepayers of some £4.95 million over the appraisal period, and that was associated with changes to the powers around discretionary reliefs. We know that this will be funded by local authorities and Welsh Government. I was wondering: what are your expectations of the new powers and how have you assessed the affordability of this for local authorities?

So, this is something that would be really wholly delivered by local authorities, but it's certainly something that I think that they welcome in terms of having that local discretion. But I'll just check if officials want to reflect on any discussions they might have had with local authorities on that point.

Yes, that's right. So, this removes the six-month limit on discretionary relief for local authorities, allowing them to provide the relief after that period of time. It was seen as too restrictive because things were coming out at a later date after that point, which essentially could be considered unfair for the business not receiving the relief.

Through discussions with the local authorities, they thought that this might increase the total application of discretionary relief by around 5 per cent, which is the figure that falls out of that, and that's based on their estimates—so, maybe times when they haven't been able to apply it—and what percentage of the total that they give currently they think might change because of this removal.

Okay. That's clear. Just a final one from me: we've talked about multipliers a couple of times already this morning—I just wondered what criteria would you use to assess any changes to the multiplier?

So, if we were to make any changes, it would have to be in relation to rateable value, use or location, because, as I say and as I've mentioned, those are the kind of fixed things that we can be confident identify that particular business, but we don't have any current firm proposals at the moment. But you can see that, in developing policy in that area, there is potential for making some quite exciting changes, which could align with the Government's policy programme—its priorities potentially around decarbonisation, for example, or wanting to support particular locations. So, there are all kinds of various things that you could do, but, as I say, we don't have any firm proposals at the moment, but—

Could there be incentives for certain—? Could it almost be positive discrimination on what sort of businesses you might want to attract to a certain area and things like that? There's a whole variety of opportunities around how you could use that, I suppose.

Obviously—

Carry on, Mike, I think Peter's finished. Yes.

The Ireland model, where they actually have zero rates and zero tax for a number of businesses that they have sought to attract, have you considered that?

So, at the moment, we're not in the space of developing proposals that might flow from the legislation. I think that will be the next step following, but we'd have to do a lot of thinking. You could look to potentially our thinking around the free ports, for example—areas that we could learn from in future, as different ways of using tax relief and so on.

I think there are lots of options now: how you regenerate areas that are less active at the moment and things like that. So, yes, it's very exciting.

It is. You can do an awful lot with it, obviously, but we'd have to come up with proposals and then undertake the impact assessment work and understand all of that, but it's a good tool for the future.

Thanks. That's me done, thank you.

Mike.

Sorry, just to continue with that discussion, of course, then you end up with the enterprise zone model where you have an awful lot of businesses just relocating a few miles down the road to get benefits, so it's not as simple as perhaps we would like it to be.

Moving on, the RIA sets out costs to the Valuation Office Agency of £14 million over the 10 years in relation to more regular council tax revaluations. It notes the Valuation Office Agency outlined a 'series of assumptions and caveats' around these figures. How confident are you in those figures?

Yes, so, I am confident in the figures and I know that the VOA's evidence to the Local Government and Housing Committee recently also displayed that high level of confidence in those figures and in the delivery of the work as well, so we don't have any particular concerns at this point.

Thank you. What assessment have you made of the impact of a revaluation of council tax on taxpayers, particularly given data following the 2005 revaluation, which suggested that more properties moved up bands than down? And, of course, there are always properties very close to the border wherever you set the figure. I assume we're going to have much more regular revaluations. Every 20 years is not a good idea, and I don't think anybody thinks it's a good idea, but I'm not sure that anybody in 2005 thought it was a good idea, or in England in 1997, which I think was the last time they revalued.

Have you had any views or any evidence on where it's likely to hit hardest? There are areas where house prices have gone up more rapidly than others. In my personal experience, I know how expensive house prices are on Ynys Môn, for example. So, there are quite a lot of areas where house prices, due to all sorts of external factors, have gone up much more rapidly than they have in other areas. So, have you got any information, or will you have any information, or will you be doing any studies on where you would expect the revaluations to have a serious effect?

So, lots of questions there. I would start off by saying that our phase 2 consultation finished yesterday for council tax reform. So, that looked particularly at the scale and the pace of reform, and it set out three potential examples, or models, that we could follow in future. Of course, there are unlimited ways in which we could actually decide to move forward. So, we have to decide, based on the responses and listening to the consultation and so on, which route to take, both in terms of the scale and the pace of reform.

But, alongside the consultation document, we did publish the Institute for Fiscal Studies report, and that set out or illustrated what each of those three models might look like in reality, both in terms of the way it affects individual households and then also the geographical impact as well. So, that's been a really, really helpful piece of work. The work shows that, for a nine band example, broadly the same number of properties move up by 22 per cent and down by 22 per cent. So, there's that. But then, for a 12 band example, more properties move up, 28 per cent, than down, 20 per cent. So, that's interesting. It showed, I think, just an example, really, of how you can design a system in infinite ways. So, that's really important.

And then that point about properties being close to the border of the band is important as well, because I think that would be part of the thinking in terms of how many bands you have and how you spread those bands particularly, because you do want to give people confidence in the system, and if the bands are too thin, then almost everybody is close to the edge of a band. So, you have to think about that as well. So, that's part of the thinking for the future, as well as the frequency of revaluations as well. So, the Bill makes provision for five-yearly council tax revaluations. So, hopefully, we can address some of the points that Mike Hedges raised.

And—. Sorry, Mike, I'll come in after you.

You talked about 20 per cent going down and 28 per cent going up, but at what stage of changing the limits do you get exactly the same number moving both ways?

I would have to ask the IFS to run that, or our officials can run that, actually, as well.

I wasn't expecting an answer on that now, but it would be interesting to know what the bands are where it stays absolutely neutral.

Am I right in saying that looking at bands is a net-neutral change? You're not looking to raise extra revenue.

No.

But it's the redistribution element.

Yes.

Going on to Mike's comment about Ynys Môn and other parts, especially in rural Wales, where house prices might have jumped considerably and there could be a change in bands that could be quite dramatic in some places, have you given any thought to transitional arrangements? I think there were transitional arrangements in 1997 and 2005—I think, but you can correct me if I'm wrong. And how might that help cushion the blow, if you like, of changing and—? Because, at the end of the day, council tax is the most regressive tax that we've got. It affects the most vulnerable and the poorest households. So, how do we make it as fair as we can, but obviously cushioning that change to a place where we want to get to, which is more progressive—and I'd argue for probably getting rid of council tax completely and doing something else, but that's a conversation for another day. We've talked about land value tax. So, what transitional arrangements have you considered, and is there stuff that you're working on currently to think through the implications of bands being changed and people being disproportionately affected?

So, your original point is a really important one, which is worth emphasising as well, about the exercise not being about raising more money overall. Because when we've done our focus groups and our other engagement with the public, we do know that there is still a level of scepticism about that. There are some people who think that this exercise is about raising council tax—it's not, it's about raising the same amount, but doing it more fairly. And I think we need to repeat that at every opportunity. But then the—. So, what the system will look like will depend on those choices about the scale and the pace, but we have said that we will—we've said upfront we'll look at transitional arrangements. One of the learnings from the last revaluation for council tax was that transitional arrangements, I think, were considered probably too late in the process, but we want to give people that confidence that we are thinking about it upfront. To what extent transitional arrangements are needed and what those might look like will obviously depend on the system that is chosen for the future as well.

Because the knock-on effect on local authorities and their tax take and then, obviously, the way that the revenue support grant is worked through, it has knock-on effects on beyond just the council tax system, hasn't it? Because it has a knock-on effect on everything else.

Yes. And we'll need to think about what, if any, transitional support is available, not just for households, but also for local authorities as well. And, again, that all depends on which system we decide to take forward. And, of course, these are for periods for which we don't yet have budgets, so it will have to be something the Welsh Government thinks about in terms of setting budgets as well.

Just one quick comment on what you said, Chair: council tax is not the most regressive. The most regressive tax is income tax, because the rich can avoid it very, very easily through a whole range of techniques, not least, dividend income. But, moving on, the RIA does not include any additional costs associated with increasing flexibility around discounts and disregards. You talked about that earlier. Can you outline what use you are considering for these powers and whether there may be additional costs incurred in the future by any changes, or if they have been made up by other things happening?

So, I mentioned the review work that is being undertaken at the moment in regard to the 53 different categories, and it is complex work and, you know, we're only part way through that at the moment, so there, I think, might be some changes that come out of that for us to consider. But there are some already proposed in the phase 2 council tax reform consultation. Those include reinstating the one-adult discount of 25 per cent, so there would be no cost implications of that; removing the statutory discount for an empty property, because, in practice, all local authorities have used their local discretion to remove that in any case, so there won't be any impact on existing taxpayers there, so no cost implications of that; and then there's a proposal to introduce a time limit for the class F exemption, and that's for empty properties where probate has not yet been granted, and we know that properties can sometimes be left empty for decades. So, those costs would include adding a council tax liability to the deceased person's estate after the time limit has lapsed, and so there would be some minor administrative costs for local authorities as well. But, of course, on the benefit side, that's about trying to bring those unused properties back into use and so on. And then, lastly, it's that move to try and change the name of the 'severely mentally impaired' discount and disregard. So, again, there wouldn't be any cost to that, but we think it's just the right thing to do.

I welcome the decision on probate because that can last a very long time and some people drag it out in terms of internal family feuds, which has a cost not only to the amount of properties available, but has an effect on income to the local authority.

You've talked about all the changes in the Bill and the potential for the reform of local taxes. How will you monitor the success of this Bill?

So, the success of the Bill in many ways will be about the impact that those more frequent revaluations have on the fairness of the system, keeping it up to date and the taxpayers' experience in terms of paying and being billed for the right level of tax and all of that kind of thing. But I think that lots of the provisions in the Bill will require further work, so work around the disregards, exemptions, discounts and premiums and so on, and that will obviously require assessment of the impact of those particular choices that are made in the future. We'd assess the impact of the Bill on multipliers. So, did a future choice on multipliers have the impact that it was intended to have at the time? In that sense, lots of the impact of the Bill comes from decisions that will be taken later, but, overall, this Bill is about modernising the system, bringing it up to date and having a system made here in Wales for local tax as well, rather than having to look to London to make changes for us. So, it's about having a modern system, really, which is fit for purpose and agile.

Thank you very much.

Just finally, just a thought. This is again a framework Bill, and we've talked about them and we talk about them a lot in this committee because of the financial impact of them, and going back to what Mike was saying, it's how you measure success when it comes to this, and you've addressed that. Have you had any further thoughts on how the regulatory impact assessments and the financial information are presented on framework Bills, and how would it help us as a committee to understand? Because we always ask, 'Well, what's the impact of the secondary legislation?' Is there anything that the Welsh Government could do, when looking at presenting Bills, to be able to somehow cost more accurately what those secondary regulations might be? Just some of your general thoughts, really, around that.

Yes. It is a difficult one, because you could give examples of how a power might be used in the future, but then it would be entirely theoretical and it might not be based on a policy that the Government even wants to take forward. So, again, turning to multipliers, you could theoretically suggest changes that might want to be made, and explore what the cost might be of those changes, but it's purely theoretical, and then people might get confused or concerned that the Government is making a proposal for a policy that, actually, is just an example. So, it is—. If there's more we can—

It's hard to balance the two out, because from a prudent use of public money standpoint, which is what we're about, testing that, and the Government's understanding of how they're going to allocate budgets, it's finding that balance of too many 'what ifs' and then it becomes meaningless, but it's how do we explore some of that element, and how do we get a better handle on how that secondary legislation works. It's not just this Bill; it's lots of other Bills. It comes up fairly regularly now with the Government structuring Bills in this way, and it's interesting to have your take on what could be done.

Yes. If the committee wants something more or different, obviously we will try our best to oblige, but we were actually, between committees, talking about the way in which we provide support. So, actually, only some of it is through regulations in any case, isn't it? Lots of our support for businesses goes through grants, so, again, that's not something that you would see in the RIA, for example, but it's something that we would be developing beyond that. It's such a wide and complex field in terms of rate support and council tax that I guess it's important that the things that we reflect in the RIA are accurate and real, rather than how a power or something might theoretically be used, because the last thing we want to do is introduce more uncertainty into what is already a complex landscape.

And I think your point about grants is interesting there as well, because grants can be given and taken away fairly quickly, without an awful lot of scrutiny of them, so that's another aspect, especially impacting the third sector, in particular, and local authorities. They base a lot of their assumptions on grants coming back year after year, and then when funding tightens up, those grants, because they're not part of the budget setting, they're more discretionary awards, then it becomes very difficult to see those. I've heard examples of local authorities thinking, 'Well, that grant money will come in', it doesn't come in, and there's a knock-on effect, then, on jobs and that sort of thing, which causes that. So, any thoughts that you might have on how we better scrutinise that as well, maybe, would be beneficial.

Yes. Totally separate to this Bill now, but we've been doing some work particularly with the third sector on grants, because one of the things the third sector always says is that they need longer term certainty for grants. One-year grants just put them in a very difficult position; they can't hire staff, and almost as soon as they've hired them, they're worrying that they can't keep them for the next year. So, we have introduced new systems within Welsh Government to try and have those grants offered on a longer term basis, and, also, to allow them to be rolled over for a further year—or a further number of years—as long as the recipient of the grant meets the terms of the grant and can be benchmarked against others in the field.

As long as they tick their key performance indicators, then it's a lighter touch to—

Yes, it's to try and give the sector more confidence. So, we work really closely with and through our grants centre of excellence. So, I'm hoping for things to be improved that way, but what I'd also like to see is local government taking the same approach, to pass that same kind of certainty on through their grants to local government. So, we're trying to share the information and the learning that we've done on the provision of grants, through the centre of excellence, with local authorities, to try and encourage them to do similar.

Thank you. And I'll bring Rhianon in for the last question, and then we'll come to time. Thank you.

Actually, it's not a question, so, I hope, Chair, you'll forgive me.

No, that's fine. You have the last word, Rhianon. There we are.

It will be incredibly important and welcomed by third sector voluntary organisations. And if there is that mechanism in terms of local government, that will be so, so welcomed, I think, across Wales, if we can get this improved. It's been a massive issue for a very long time. Thank you.

So, I think there's positivity around the table and power to your elbow when it comes to that, because, I think, it's important. In all our conversations with the third sector, I think that certainty of funding is important. I know we've drifted off on this, but I think it was an interesting point.

Thank you so much for your time this morning. Obviously, there will be a transcript available for you to check for accuracy. And I think that brings us to time on this.

So, under Standing Order 17.42, we resolve to exclude the public from the remainder of this meeting. Is everybody content? Thank you very much. Diolch yn fawr iawn.