Local Government and Housing Committee

Yes. I'll just ask officials to introduce themselves.

Good morning. Bore da. Ruth Cornick, local government team lawyer.

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

Morning. Hi. Ben Crudge, head of local tax policy.

Okay. Well, croeso i bawb. Thank you, all, very much for joining committee this morning. Perhaps I might begin with initial questions. Firstly, in terms of this legislation and the provisions in the Bill, Minister, do you think that a post-legislative review of the Bill's provisions and its implementation would be appropriate?

I think it's important for the implementation of the legislation to be subject to ongoing review, and there is obviously an established process in place already for managing the post-legislative review of the Bill's provisions. Detailed policy implementation will be developed with practitioners and working groups to ensure that the Bill's provisions are fit for purpose, and that will draw on practical experience and local knowledge. But I think that the important factor here is that, mainly because of the fact that many of the provisions in the Bill will be developed later, so in secondary legislation, probably it wouldn't be appropriate to have on the face of the Bill a date or a process for review. I think that it will inevitably be subject to that review work. We would need to develop those clear plans for review work at a later date so that we can assess the effectiveness of any regulations or reliefs and so on flowing from this work.

Minister, in terms of subordinate legislation, it's a frequent tension, really, isn't it, between what is included on the face of the Bill and what's dealt with in secondary legislation, and this Bill seems to be particularly heavy on subordinate legislation. We heard from the Chartered Institute of Taxation that, to quote:

'It appears that the Senedd is being asked to make laws without knowing how the powers conferred may be exercised by Welsh Ministers and therefore without knowing what impact the legislation may have on Welsh taxpayers.'

Is that a view that you accept?

No, it's not. And I know that several other stakeholders, including many who provided evidence to the committee on 25 January, also took a different view. I think it's important to note that the statement of policy intent that accompanies the Bill indicates the policy intention for the subordinate legislation that could be made under the provisions of the Bill. Also, it's important as well to recognise that the subject matter of the provisions are not considered to be of greater or wider significance than those already capable of being changed through subordinate legislation in respect of council tax and non-domestic rates systems. So, I think that there are those important points.

The vast majority of regulation-making powers in the Bill will be subject to the affirmative procedure, so the Senedd will obviously have the chance to scrutinise those regulations. And really importantly, since 2011, there have been many instances where the UK Government has legislated on our behalf, so we've relied on them to legislate in this space to help us deliver necessary changes to non-domestic rates and council tax legislation. So, in that context, actually, I think that the Bill provides the Senedd with greater powers than it currently has.

Okay, better secondary legislation than approving, or not, the UK Government legislating on our behalf. We also heard from the Chartered Institute of Taxation, Minister, that, in its view, generally, secondary legislation should be reserved for administrative matters and for the setting of rates. So, I hear what you say, but do you think there's any strength in that view? Do you understand that view?

This is something that I know the Legislation, Justice and Constitution Committee has also raised, and I've recently written to the Chair of that committee setting out how we've undertaken, really, an analysis of the secondary legislation-making powers in the Bill and compared those with those powers available to Ministers in England and Scotland. I think that might be interesting for the committee, so I'd be more than happy to share with you a copy of that.

Yes, please.

Obviously, regulation-making powers will enable the delivery of policy in a more responsive way, and I think that that is important, but it won't undermine, I don't think, the ability of the Senedd to scrutinise, and, as I said in answer to your last question, the subject matter of the provisions aren't considered to be of greater or wider significance than those that already have powers in secondary legislation in any case. But I'll just pause and see if officials have anything further to add on this particular point.

Nothing in particular. I think, as you say, Minister, the current position is that there's a mix of things that can be changed through primary or secondary legislation, so what we're doing here around secondary is just achieving greater consistency, I think, in terms of the approach that's taken to amending the legislation as a whole body.

I'd add, as well, that we have considered what it's appropriate to add on the face of the Bill, and, given the way in which developments happen in the council tax space and non-domestic rates space, it's important, really, that the legislation that we do have will stand the test of time. So, in that sense, I think that secondary legislation, in many cases, is the appropriate way to make changes to have a system, really, that's fit for purpose for the future. We talked in our previous session about how reform in this space hasn't been taken for 30 years, so it is high time that Wales has its own legislation in this space and doesn't rely on UK Government to make changes for us.

Okay. You mentioned the affirmative procedure in terms of some of the provisions in the Bill, Minister. Are there any parts of the Bill that you think would be particularly suitable for the superaffirmative procedure, which, obviously, gives committees more time to consider Welsh Government proposals and scrutinise them?

Yes, we have considered all of the proposals, and particularly taken into account the Welsh Government's guidelines on the factors that would tend to indicate that a superaffirmative procedure would apply. We don't see that there are any provisions in this Bill in subordinate legislation that would require that, but we have undertaken that work, and also recognising that the superaffirmative, really, is only used in those exceptional cases, and I'm not sure that there's anything exceptional about what we're proposing in that sense.

Okay. In terms of statutory consultation before using powers in this legislation, Minister, would you consider any other powers appropriate for the use of the statutory consultation procedure?

Obviously, we'd undertake all of our work in the context of our current legal duties in respect of consultation, and we have an established approach and policy in terms of consulting with stakeholders as well. Maybe I'll ask Ben or Simon to reflect on some of the need for urgency in many cases and give some examples, perhaps, around tax avoidance or reliefs, that might come under the umbrella of NDR.

We've consulted regularly in this area over the last five years at least. We've got a strong record of consulting with key stakeholders on this and balancing the views that you'll hear from the different stakeholders when it comes to this and the financial implications of this. The Bill itself, I don't think, leads itself to any more statutory consulting process, when we have a strong record and we do follow the process already and have shown over the last decade consistent consultation in this area.

Okay. If you've nothing to add, Minister, to those comments, we'll move on then to other committee members and, firstly, Sam Rowlands.

Thanks, Chairman. Good morning, Minister, and thank you for taking the time to be with us this morning with your team as well.

I just want to touch on some questions around the capacity of a number of bodies that this Bill would be likely to impact. So, I'm just interested first of all in your confidence in the capacity of the Valuation Office Agency to be able to cope with the requirements of the Bill, and what interventions might be required in the event of implementation delays as well?

So, I do have confidence in the capacity of the VOA to deliver. I think, when the VOA gave evidence to this committee, they demonstrated high confidence in their ability to deliver. So, I think that that's to be welcomed. Officials have engaged really closely with the VOA over a long period in developing the provisions, and in the discussions that we've had about having more frequent revaluations, for example. And I've met with the VOA myself on a number of occasions to discuss these and other issues. So, we have high confidence in their ability to deliver.

The change in relation to non-domestic rates is in line with that which is being made for England, so the VOA is already setting itself up to undertake more frequent revaluations on non-domestic rates more generally. The most recent non-domestic rates revaluation took place last year, and it went incredibly smoothly, I think, was our main reflection from that. And the VOA is obviously learning from that experience and considering how it approaches the next revaluation and future revaluations as well.

So, overall, the provisions in the Bill will modernise the way in which ratepayers provide information to the VOA, and, again, that has flowed from some really detailed work, which we've been undertaking, from the VOA. So, we have a very good working relationship with them and are confident in their ability to deliver.

Yes, thanks. And do you have the same level of confidence in the valuation tribunal?

Yes. Again, I think the Valuation Tribunal for Wales has demonstrated, again, that it's confident that it can deliver. I know that it is recruiting some more staff and recognises the importance of using the time it has available to prepare for changes. I think that, potentially, VTW could be thinking, potentially, more in the space of council tax, in terms of its work and increased pressures, rather than non-domestic rates.

And just to help me understand a bit how you gain that confidence from the valuation tribunal in particular, could you describe the systems or the processes or the structures you have in place that give you that confidence that they will have that capacity in place for the implementation of the Bill?

Yes. So, I'll ask officials just to talk to that because they have that kind of regular ongoing relationship.

Yes. So, we've had regular conversations with the VTW. They're part of a tripartite group that we have with the VOA, which we meet on a regular basis also. We've been working on this for several years leading up to this point, developing an understanding of what revaluations look like. The additional burden that we'll put on those two organisations has been a key part of that discussion. They are both quite clear that they are in a good place to deliver now. The VOA have obviously delivered the revaluation for 2023 and VTW obviously were a part of that, and they've come out of the other side of that confident. The council tax work is new and we've been training on that for a while with them and they're also confident that they're building up to deliver that also.

Thanks. And just, sorry, to expand on that a bit further, because, when we asked questions to the valuation tribunal, in particular around the challenge and appeal process, I'll quote what they said, they'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.'

And they finished it off by saying:

'So, it's a bit of an unknown.'

So, they seem a bit less clear. Do you think there's just a bit of confusion there or—? You seem much clearer, but you're not them, where they themselves seem less clear. I'm just wondering why that might be the case.

So, challenge and appeal came into place for the non-domestic rates system in April 2023. The process itself hasn't resulted in appeals landing with the VTW yet, because it is a stringent process of challenges and appeals. So, I think—without putting words in the VTW's mouth—they're saying that they haven't got to the end of that process in its first cycle yet, because it has just landed. However, it hasn't resulted in increases in the number of appeals that they're having to deal with at this stage.

So, a similar system on the council tax side or an appeals process on that side is obviously an unknown, if you do a council tax revaluation, but they are also building up capacity to be able to deal with it.

Can I just press this a bit further, Chair, if you don't mind? You said earlier, Minister, that it's quite a lengthy process for appellants, which then provides time for capacity to be built up. Is there a risk that that process could be lengthened unnecessarily because, conversely, the capacity hasn't been built up? So, perhaps a helpful way of building up that capacity or planning for that capacity is perhaps to lengthen that process for appellants. And, of course, I'm sure you wouldn't want an unnecessary delay for people appealing any rate changes for them. And how will you have confidence that that isn't taking place, that that process isn't being unnecessarily lengthened because they haven't got the capacity and haven't planned enough for the implementation of the Bill?

Perhaps, again, I'll ask Ben to reflect on what he's hearing from VTW in his regular discussions with them, but I would also just reflect on the fact that more frequent revaluations would hopefully eventually lead to fewer appeals, in the sense that the system is being kept up to date on a more frequent basis and therefore people can have more confidence in the accuracy of the bills that they're receiving.

Yes. So, from an NDR perspective, the check, challenge, appeal process does give you three processes there. So, check, which hopefully gives you the information you need so you don't have to go to appeal; challenge, which again, hopefully, gives you the back and forth with the Valuation Office Agency before you get to the appeal stage. So, those processes hopefully give the ratepayer or taxpayer the ability to look at and interrogate their position before they get to the appeal stage, with the idea of reducing the total number of appeals.

The same will be thought through in terms of the council tax side of things, and the VTW and VOA have been through that journey on the NDR side, and they have an understanding of the capacity requirements to deal with appeals when they do land. So, I think, going through that journey again on the council tax side and having done it on the NDR side recently provides us with the confidence that they'll be able to do it again.

Yes, and you're confident that they wouldn't have unnecessary delays in that process because they haven't got the capacity built up at that final stage.

I am confident at the moment, yes.

All right. Thanks. And then the third group, or particular organisation, impacted by this is local government, of course, and the amount of work that they do in this area. They shared with us some concern that software costs could increase as a result of these provisions, and that such costs may not be the ones that can be absorbed within normal administrative costs. Perhaps you'd be able to speak to that point and how you are going to mitigate that risk that they are seeing.

We wouldn't expect authorities to incur materially increased software costs associated with revaluation. That certainly hasn't been the case in previous revaluations. But, if we were to introduce something else alongside the revaluation transitional support, for example, then there could be potentially increased costs in terms of software development, and so on. We have in the past provided additional administrative funding to local authorities to support the administration of relief, so some of this would depend on the choices that are made further down the line in respect of any transitional support that might be necessary.

Yes. And just on that point, are you aware of any conversations around local authorities working together to help reduce some of those costs, if there are software implications? Is that something you're aware of, or not?

I'll check if officials have had any conversations with local authorities on—

From a procurement point of view or collaborating in terms of—. All 22 local authorities are going to be going through the same process at the same time, so to make some sense of it all.

I'm not aware of those discussions, but it does make sense.

Yes, okay. Thank you. And then just moving on, if I may, Chair, to, Minister, probably your favourite thing, which is the antecedent valuation date. Could you outline your powers to set the AVD and whether you are considering shortening the date for future revaluations as a result of the Bill's provisions, as well?

So, the AVD is already set using secondary legislation, which is made under paragraph 2(3)(b) of Schedule 6 to the Local Government Finance Act 1988. So, there are no legislative constraints in relation to the required gap between the AVD and the completion of a new ratings list, and the Bill doesn't change any of that. We are working with the VOA to explore the potential for the gap between the AVD and the date of revaluation to be reduced in future. That would be a fundamental change to the system and one which is something that we're considering in the longer term rather than the more immediate set of reforms. We need to ensure that the more frequent revaluations and the measures that are required to achieve that are embedded first, and that will then form some more detailed consideration of shortening the AVD in future rounds.

Would you have a preference there, then? Would it be preferential to have a one-year AVD rather than two years? What's your preference?

Well, a shorter one would mean that revaluations are more closely reflecting the latest market conditions. It would, though, require the VOA to work to a much more compressed timeline, so there would be some challenges there. We wouldn't want to risk or undermine the robustness of the work that the VOA undertakes, so we'd have to consider that in terms of any shortening of the gap in future rounds.

Yes. So, it's currently not a preference, but something to perhaps consider. Is that a fair summary?

Something to consider for the longer term of the reform programme, yes.

All right. Thanks. And then, just a couple more questions, Chair, if I may, as well. In terms of the challenges of those shorter revaluations, currently proposed at three yearly, what sort of discussions have you had with the VOA about possibly shorter revaluations and how they see challenges and opportunities with shorter revaluations in the future?

So, again, this is—. You know, our immediate thoughts are about embedding the three-year revaluation cycle rather than moving to anything shorter. There is a balance to be struck here in terms of providing stability to businesses and also reflecting the most up-to-date market conditions. So, it is that kind of balance that we're trying to strike, and three yearly is what businesses have been telling us that they wanted us to move to and to give them confidence that that would happen. So, that's what we're doing on the face of the Bill, but, you know, in future, technology could change, conditions could change, so there could be a case for more frequent, but again, in the first instance, it's about embedding these particular reforms.

Yes. And just perhaps a similar question from me to one earlier, as well, to understand, again, the structures or the organisation you have in place to understand from those businesses—. You said businesses are telling you that three years is what they want. Perhaps you could expand on those conversations and the assurances that you can give to us as a committee that you are hearing from business as to how that works best, and, off the back of this Bill, how you'll be hearing from them as to the impact of the three-year cycle and how you're going to consult with them—the structures you have in place for those consultations.

Again, perhaps I'll bring Ben in to talk about some of the routine engagement that we have with the sector. I had a very good meeting recently with the Welsh Retail Consortium, and they were stressing the importance of more frequent revaluations as well. I engage directly, but officials engage on a kind of routine basis with businesses to hear what their particular aspirations are for non-domestic rates and also their particular concerns as well.

Yes.

To add to that, the consultation that we ran at the end of 2022 gave us a good feel for what businesses wanted in the revaluation space. Aside from that, we have our routine meetings with the different stakeholders that engage with the tax system—the ratepayers forum probably being the most formal of the lot, where you get to sit in front of all ratepayers and hear their views on the tax and the pros and cons of the tax. We also have a lot of other engagement with different areas—for instance, hospitality and the Welsh Retail Consortium, as the Minister noted.

Great. Thank you. Chair.

Okay. Thank you, Sam. Carolyn Thomas.

I'm just following on from the consultation. So, regarding conferring, varying or withdrawing reliefs and exemptions, would you commit to consulting with stakeholders and ratepayers before using the powers to confer, vary or withdraw reliefs or exemptions, and how would you see that happening?

So, we would operate within our legal duties to consult. What I don't want to do is put anything on the face of the Bill that might make it more difficult for us to offer support. So, I've just been reflecting on ways in which we've had to respond rapidly in recent years. In the pandemic, for example, we had to respond very rapidly in terms of providing support to businesses through reliefs. Having to go out and consult for six or eight or 12 weeks on that would have been devastating for those businesses. So, we just need to be proportionate, really, in terms of remembering the need to respond rapidly, but also finding ways in which we can engage on those more routine things, really, which don't require that kind of emergency response.

And then, the other area, I suppose, where there might be some concern if you were engaging and consulting for a long period would be around closing down avoidance opportunities as well. Obviously, you don't want to go and consult people on those particular things. You need to identify those issues and respond to them rapidly. So, I think, in the normal course of things, obviously, there would be consultation, but we do need that flexibility to respond in emergency or urgent situations as well, I think.

Regarding charitable rate relief, with those changes happening, for the smaller charities, just so that they're aware and they've got time, actually, to make sure that they comply, because sometimes they're run by volunteers, would you ensure that they're fully aware and that they've got time to get used to that beforehand? That's my first question on that—that concern.

Yes, it's really important that ratepayers are aware of their obligations, and I might again invite officials in if they have any thoughts on that particular point. But it is important as well that we are proportionate. Allowing local authorities a degree of flexibility and local determination, I think, is really important, and the kind of things that we are asking for from charities are things that legitimate charities would be available to provide—so, accounts and an annual report. The annual report will be proportionate to the size of the charity and the work that it undertakes, and so on. But we know that this is a particular area where there is avoidance, and we need to ensure that genuine charities are able to still benefit from the relief, but that we close down those other opportunities that are exploiting the system, and which are, essentially, taking money away from front-line public services in our communities.

Yes, just to add that, local authorities are very experienced at doing this already. The application of charitable relief is something they've done for a long, long time, and so engaging with charities and making sure that they're meeting the criteria in its current form is something that they do annually already, or regularly already, so the addition of accounts or annual reports that genuine charities already have on file isn't considered a giant burden compared to where they currently are. If, through this process, further guidance from the Welsh Government is helpful, we're more than happy to start writing that with them and to help them with that process.

Thank you. Just regarding guidance, would you be looking at developing guidance for local authorities so that they can apply any changes consistently across all the local authority areas?

If that's something that local authorities would like us to provide, as some further detail and information and advice, then we're happy to explore with local authorities what they would find useful and respond.

In my experience, I find that, sometimes, if they've got guidance they know where they stand. It's black and white. If it's challenged, it's helpful as well. That's something that's been brought to our attention.

And on the completion notices, it's noted that provision around completion notices would entail some modest administrative cost for local authorities. You did say earlier that you could possibly provide some administration support. So, I'm just asking you about that, really. There's no figure for case numbers been provided by local government, so we haven't got any details yet about the potential impact, but I know how they're struggling at the moment and resources are quite stretched. And they've asked that any new legislation can be funded, going forward. So, really, what additional support do you think might be available to help them as this comes forward? Is that something you've considered?

I think, on the completion notices, that will be marginal in terms of the work that it creates, if you like, for local authorities, and they did respond really positively to our proposals in this particular area. Actually, returning businesses to the ratings list more quickly and in a more timely manner actually benefits local authorities, because they're able to benefit from the rates in a more timely manner. So, we wouldn't expect the number of cases in this particular space to be very large, I don't think.

Okay. And just regarding non-domestic rates multipliers, how would you assess the likelihood of potential market distortions, or scope for avoidance behaviour, when developing proposals for the different multipliers?

Well, that would have to be part of the work that we took forward in relation to any proposals that we might make for the multiplier. So, everyone will know, at the moment, we just have one multiplier. So, this legislation aims to enable Ministers to make changes to the multiplier, potentially, in different—. So, you could do it for different types of businesses or locations, for example. And you could use that, then, to try and drive forward other Welsh Government priorities. So, it does give a much greater level of flexibility in the future. So, we don't have any proposals to put forward at this point, but when we do, we'd have to think about all of those important points as well.

Okay. And then there would be consultation on that as well, just to make sure that there are no unexpected concerns raised from it.

Yes, we would expect—

I think it was concerns regarding geography or property, which could distort the rateable value. So, sometimes something comes forward and you think, 'Oh, that's a good idea', but then, actually, when it's implemented, it can cause some issues.

Yes, we would only really be able to do it on the basis of the rateable value, the description or the geographical location. So, I think that the system that we would potentially introduce would have to be—. Because those are the only descriptors, really, that we could apply, so we'd have to be mindful of that. But anything that we would propose in future would have to be considered and properly assessed in terms of impact and so on.

Okay, thank you.

Okay, Carolyn. Jayne Bryant.

Diolch, Cadeirydd. Good morning. Just around information for ratepayers—a few questions around that. Perhaps you can elaborate on the expected impact of the new duties on ratepayers who are not currently engaged with the valuation system regularly.

So, all ratepayers will have to comply with the duties, including those who are receiving 100 per cent support. And through self-declaration, valuation evidence will continually have to be kept up to date if it changes. And that really does reduce the need for more burdensome requests for information, especially if nothing has changed, for example, and that helps in terms of preparations for the revaluation.

The annual confirmation will, in most cases, be really quick and straightforward. It's just intended to be a declaration by the ratepayer that the information already held by the VOA is accurate. And it will also ensure that any changes that haven't been reported through the year have then been captured to keep things up to date and accurate.

Eligibility for some full reliefs depends on the rateable value for a property, and that makes it really important for the VOA to have that information, so that it's able, then, to arrive at the right rateable values for those properties, and then that any reliefs can be applied.

Equally, the information provided by ratepayers will help clarify the picture more broadly. So, it has benefits for the whole system, if you like. So, it helps to value similar properties, and even though some properties might attract 100 per cent rate relief, still capturing that information does help, then, ensure that we have the right values and we have a fair system for those that aren't captured by that 100 per cent rate relief. So, for example, rates may have to be paid on a small shop that is occupied by a chain, but the neighbouring shop might be independently owned and not pay rates, but, of course, the whole system benefits by having the correct valuation of those properties.

So, I think that, as I say, improving the valuation system overall will help the whole system and ensure all ratepayers are paying the right rates.

Brilliant, thank you. Are you confident that the online portal will be up and running in time for the revaluation in 2026? And have you put in place any contingency in case there are any delays?

So, the VOA is working to deliver the next revaluation in 2026 without the system in place. That's always been the plan. So, bringing forward this work will help with future revaluations from 2029 onwards. So, there's definitely plenty of time to ensure that we get this right before it comes into force, and those information duties are commenced. And it will only be brought in once the VOA is clear and satisfied that the system that they have is fit for purpose and that taxpayers can reasonably be expected to comply with it. So, we have plenty of time, I think, to get this right.

Brilliant. Can you expand on the efficiencies expected in aligning the revaluation cycles in England? You touched a little bit on that. Is the online system bespoke to Wales, and if not, why are the costs in the region of £15 million over 10 years?

The costs have been estimated by the VOA and they, of course, are responsible for delivery of the system on an England and Wales basis. So, the online system won't be bespoke to Wales overall, but it will comply with our Welsh language standards. And the cost average is £1.5 million a year over those 10 years and, actually, in the context of a £1.1 billion system of non-domestic rates it is relatively low and, I think, reasonable. But we do continue to work with the VOA to monitor the costs and the progress as the system develops.

I think Ben touched on the engagement you had with hospitality, for example, but perhaps you can respond to concerns that there have been from the pub and hospitality sector about the additional obligations placed on them as a result of the provision?

I think that the additional requirements will be reasonable and proportionate and they won't be onerous. We intend to make a system that is easy for business owners to navigate, that they can very simply confirm their details or otherwise on that annual basis, and that the system that we have in place shouldn't be something that is difficult to navigate. As I say, we've got plenty of time to create something. And I'm sure that we'll want to involve the business sector with that, to advise us and assist us with our thinking as we develop that as well—or the VOA develops that.

Okay. Thank you. And just around that, the point around digital exclusion—you said the portal won't be up and running for a little bit. But are you confident that adequate support will be available for ratepayers who are not able to use online facilities?

The VOA does already provide a whole range of services in a digital manner at the moment. They do, also, routinely provide alternative means for engagement for those who aren't able to access online services. So, we'll definitely have those discussions as we develop the system moving forward. I think, realistically, most businesses that are operating from a premises will have the ability to undertake their business in a digital way. But for those who haven't, then we certainly will find a way in which they can be properly engaged.

Great.

Might I just add, just to confirm—so under paragraph 4L of Schedule 9 to the Local Government Finance Act 1988, the information would be provided to the valuation officer, either via the online system or another manner agreed with the valuation officer. So, just to confirm that the Bill provisions make sure that there is that alternative method of engagement.

Brilliant. That's really helpful. Thank you.

Jayne, could I just bring Mabon in at this point? Mabon.

Yes, absolutely.

Thank you, Chair. Just very quickly—. In terms of this online portal, when will it go out to tender, in terms of who will put it together and who will be operating it?

That would be for the Valuation Office Agency to manage. The actual specifics of when they will go out, and how they're tendering that process and how they're developing it—you would have to ask them.

Okay. And so will you be able to put limitations on who can tender? I'm thinking about software such as this—would Fujitsu be allowed to tender for this kind of work, for example?

They'd have to operate within the existing procurement legislation, so, presumably, Fujitsu or any company would be able to tender for that. But we can get some more information for committee on the public procurement rules that will be relevant to this.

But do you have a view on whether or not Fujitsu should be allowed to apply and should get a contract?

I think the First Minister answered a similar question previously on this in the Chamber. The Welsh Government doesn't have the ability to identify particular businesses that—we certainly couldn't do it for the VOA—were not allowed to tender, so—

But the new procurement Bill allows the Welsh Government—the new procurement Act—to stipulate whether or not a company is fit enough to apply for tender, whether it's within your ethics and code of principles—

We'd have to take a lot of legal advice in that space, rather than taking an instinctive, gut, moral view on it; we'd have to take a lot of legal advice, I think.

Okay, Mabon. Jayne.

Diolch, Gadeirydd. Just going back to the information for ratepayers and perhaps some guidance, what sort of information campaign will be undertaken by Welsh Government and the VOA to raise awareness of the system before it comes into being, and what role will the Welsh Government have in the development of that guidance to support ratepayers?

So, we'll work with the VOA to ensure that they can reasonably be expected to understand the requirements of them, and it will include the provision of guidance from the VOA for ratepayers, and then we'll work with the various sectors to ensure that their members and the people who they represent are informed of the changes.

Brilliant, thank you. And just finally from me, Chair—it's just around information on penalties and appeals. You've previously stated, Minister, that the new penalty regime will not be initiated until ratepayers are reasonably expected to understand and comply with the new duties. What's your definition of 'reasonable' within this context, and what period of grace will ratepayers have to familiarise themselves with that new system?

So, as we said, before initiating any regime, the VOA has to be confident that ratepayers can be reasonably expected to engage and that they aren't encountering any difficulties or any barriers in terms of using the service. So, we'll have to consider that, so I don't think we can—. It has to be about understanding the user experience and taking a view when we can be confident that the system is fully up and running. As I say, there's plenty of time to develop something that is appropriate. Once initiated, the penalty regime is intended to provide scope for lenience where appropriate, and providing— . It's intended, really, to provide a deterrent for those who choose not to comply rather than penalising those who have attempted but encountered some issues. So, we'll encourage all ratepayers to comply, but the system won't be unnecessarily punitive on those who just struggle or make genuine errors.

That's very helpful. Thank you. Diolch, Gadeirydd.

Okay, Jayne. Yes, Sam.

Thank you, Chair. Coming now to, perhaps, more questions around the information expected from ratepayers, in particular the comments that Jayne Bryant raised from the Welsh Beer and Pub Association, who again described what's being proposed as an unrealistic prospect for many pubs. I think, Minister, in your response, you seemed to think that that perhaps wasn't the case. Do you think they're misinformed if they think it's unrealistic to have these 60 days to submit information to the VOA on any changes to what's described as 'fair, maintainable trade'? Have they just got it wrong, then, do you think, the beer and pubs industry?

I think perhaps there's more work for us to do in terms of communicating to stakeholders the extent of information that will be required. For many, many ratepayers, it will just be a relatively simple engagement with the VOA, providing some easily accessible, relatively basic data. So, this isn't intended to be onerous; this really is about ensuring that the understanding that we have of the tax base is right and that people are getting correct and fair bills as a result of it. So, I don't think it should be considered an unrealistic prospect to provide that level of information, but perhaps between now and 2028, or 2029, there's lots of work for us to be doing to engage and help people properly understand what's required.

I think that's certainly something to take away, because I'm sure, like me, you've read the valuation of public houses approved guide front to back. It's a 45-page guide split between drinks revenue, food revenue, hotel revenue and other revenue within a pub. Then there are other considerations—a whole section at the back around that. I'm sure you can imagine, for someone just wanting to run a small family pub in a village, having, currently, a 45-page guide as to how to line up with that, plus additional what they describe as 'administrative burdens' on them, it does, perhaps, start to put some people off running those important pubs and hotels in our towns and villages. So, I think there's something there, certainly, to ensure that people aren't put off running these important businesses in our towns and villages. Is that something you are saying you're committing to today, to ensure that engagement and that information is shared as readily as possible?

Yes, we'll definitely consider all representations, and recommendations of this committee, but then also continue what I think is good and significant engagement that we have, certainly at official level. But then I'd also say that those same business owners you've described would want to be confident that the rates bills that they were receiving were fair and accurate, and this is all part of a system that will give them greater confidence that the bills they are receiving are that.

Chair, can I just ask one more quick question? Again, it's on this information point. Because, clearly, there are thousands of businesses at the moment who probably don't engage very much at all because they don't pay any rates at all, due to small business rates relief, and there are going to be new requirements on businesses to engage, where they've never had to before, really, because, I guess, after so many years of not having to pay those business rates, you're probably not going to take a huge amount of notice of that bill coming through your letterbox. I'm just wondering how you think you're best going to be able to engage, and how all the relevant authorities are best going to be able to engage, with those many thousands of businesses who currently have no reason, really, to have to spend time and energy looking at their rate bills.

I think something that's worth clarifying is that businesses do engage, and there has been a burden on them during each revaluation that's happened to date. So, in 2017 and 2023, and in 2021, when the revaluation didn't happen, these businesses did engage with the Valuation Office Agency. They engaged in a sense that they had to produce information to get a rateable value for these properties. What this process is doing is hopefully making it a better process, a more streamlined process and a less burdensome process. We're not going from nothing to lots; we're actually going from, hopefully, lots to a slightly better version. So, what these businesses are bringing forward—. They've always had to have a valuation, and they have to have that valuation to be able to receive the relief in the first place. So, that process has always happened, but what the VOA is trying to do is make it a more streamlined, easier engagement process with these businesses.

So, you're not concerned that there'll be, potentially, many businesses that perhaps don't engage at the level that they will have to in the future—that's not a concern for you at the moment.

I would think it's definitely a concern, but it's something that we're going to keep tracking as we go through the process.

All right. Thank you. Thank you, Chair.

Joel James.

Thank you, Chair, and thanks ever so much for coming in this morning. I just want to talk about the proposals for council tax. As you'll be aware, one of the concerns is that, having not been revalued for nearly 20 years, there's going to be a big impact on some people. I just wanted to get an idea of what sort of evaluation the Welsh Government has done on that and whether or not people might be disproportionately affected.

We have the phase 2 consultation, which has just closed, in relation to our council tax reform programme. That particular consultation looked at the scale of reform and the pace of reform. Decisions haven't yet been taken with regard to either of those things. So, we'd have to be clearer about the impacts of the choices that we made once we've decided the next steps on both of those sides. But I think that pointing to the IFS report is really important, because we published that alongside our consultation document, and that gave a much deeper level of detail as to what the impacts could be for different types of households, and different parts of Wales, in fact. So, I think that we don't yet know, because we don't know which choice we'll make, following listening to the consultation responses. But the IFS gives a really good idea of the different choices and what the impacts might be. That said, one of the things that we've said in the consultation, as well as the three illustrative examples of potential ways of reform, is that reform options are endless, so are there other choices that are going to come forward through the consultation as well. So, we're very much in that listening phase now.

It's funny that you should mention the IFS then, because one of the things that was brought up in the—. Sorry, I have feedback because I'm listening to the sound of my own voice, and it's a bit disconcerting. One of the things that was brought up with the IFS was that they were generally supportive about having the five-year cycle—so, when the revaluations are brought in, having the five-year cycle. But obviously, it's within the discretion of a Government Minister, and, with the Senedd Bill looking at four-year terms for Senedd Members, they were worried that there might be a situation in the future where the Minister could delay difficult decisions and push it back. Is that something that you could see happening?

We've suggested five years as the cycle for revaluation for council tax because, again, we think that that strikes that balance between certainty but then also keeping the details up to date. Because as you say, it's been 20 years since the last revaluation. The legislation, though, does allow for other dates to be chosen. You could find yourself in a situation, for example, where valuation technology moves and the options become greater. That could be something where you could move to a different cycle. We did have our phase 1 consultation, and some of the respondents there, it's fair to say, wanted shorter cycles, from one year to three years, but others suggested longer cycles—eight to 10 years in some cases as well. So, I think that what we're proposing strikes a balance in terms of what we've heard about people's requirements.

And you couldn't see a future scenario where you brought it in line with the Senedd term cycle.

I don't know why you would bring it in line with political terms, because I think that council tax reform needs to be seen as a good thing in itself rather than something that is political. I think that bringing it into a political cycle might add an additional level of spice to it that isn't necessary, if you like. But also, I think that the more frequently revaluations take place—and it's the same for NDR—the less churn you have, the more you're able to keep things up to date and relevant, the fewer properties you would see moving between bands. I think that that's important as well.

Perfect. Section 18 of the Bill is making a provision for council tax discounts, disregards and exemptions. Obviously, there's about 50 at the moment, and there are plans that they will probably stay the same, from the evidence that you've given previously. I just wanted to get an idea of timescales about when you think these will be brought into force.

We've currently got a working group that is making its way through all 53 of those discounts, disregards, exemptions and premiums, exploring if they are fit for purpose. They'll also be, of course, considering if there are others that are relevant that should be introduced as well. I think that, inevitably, we'll end up taking a phased approach to delivering the outcomes of the working group's review and considering those. It may be feasible to introduce some outcomes in 2026-27, and some later, but I think there are some things that we can do in the more immediate term—improving and addressing the low take-up of the council tax reduction scheme, for example. I think that we need to take some action on that pretty urgently, because there are so many people struggling who aren't aware of that support, or certainly aren't aware that they are eligible for it. The timelines of those kinds of changes aren't dependent on where we might undertake a revaluation or any changes to the tax bands. So, I think that it's going to be a phased programme, with some more immediate things that we can do in the shorter term.

Just one final question, Chair, if I can. Obviously, we started by talking about the IFS, and in the evidence session—it was quite interesting, actually—they specifically highlighted the single person discount. And obviously, I know in the past, Minister, you've said that's not going to be changed, but they expressed concerns—if I can look at the notes now—about how it distorts the tax system. They've highlighted whether or not a flat-rate tax should be brought in, or a single discount linked to a specific banding, like a band D property. They would argue it's a fairer system, I suppose, because there are people in bigger houses, single discounted, paying maybe not the fair amount. I just wanted your views on that.

I do know that there are different views on the single person discount. There are those who would like us to abolish it entirely. But the decision that we've made is to keep the single person discount, keep the rate as it currently is in terms of that 25 per cent. I don't see any wider appetite, really, certainly within the Senedd, to change that at the moment.

Is there scope to look at the different percentages? Because I know at the moment you can only do it at either 25 per cent or 50 per cent. Obviously, with this, it brings in a scope where you can look at different percentages or even different discounts. Is that something you're looking at for other discounts as well?

The intention is to keep it at 25 per cent, but following the legislation, a future Government could increase it to 50 per cent, as you just suggested. But it would have to, obviously, go through the proper consultation process, and so on, and the detailed work to cost that as well. So, there would be some choices to be made. But certainly there are no plans to make any changes at this point.

Just for the record, I'm not suggesting putting it up to 50 per cent; it's just that this gives an opportunity to look at all discount rates. At the moment, by law, you can only offer 25 per cent or 50 per cent rate discounts, whereas this allows a bit more flexibility.

That's one of the key things that the legislation wants to do—to put in place a system where, in future, Ministers can make changes to the discounts, disregards, exemptions and premiums in a way that is more responsive, if you like, to conditions.

Perfect. Thank you, Chair.

Mabon ap Gwynfor.

Thank you. I wanted to look at one section that on the face of it, perhaps, looks unremarkable but has caused problems, which is section 20. There are concerns that the decision in this section is going to remove the requirement for local authorities to publish council tax determinations in local papers. Some of these printers and publishers are concerned that this is going to be a threat to the viability of the papers. Do you agree with that?

I do know that there are concerns from within that sector, because, obviously, the income that they receive from local authorities providing information through their pages is welcome to them, but I also think that we have to be realistic that many people now get their information in other ways. Things have changed a lot since the last revaluation. Things have changed a great deal since the legislation that we're currently operating under was introduced, and people now look to social media for information. And also, when people get their council tax bills they'll have information from the council as well. So, there are other ways, and I think we're just trying to reflect modern life, if you like, in terms of the way in which people consume information. It doesn't mean, of course, local authorities can't still continue to take adverts out, and I'm sure many of them will definitely be considering that as well.

There is concern that is the first step towards removing statutory notices. Could you give some assurance to these publishers and printers that that's not the intention?

This Bill only deals with the notices in relation to local taxes. It's not a wider programme.

As part of the Bill, there will be an expectation that local authorities will comply and ensure that there are arrangements in place so that the public do know about any changes. How do you foresee that you will be ensuring that local authorities are in compliance with that and ensuring that the public know about these changes?

Perhaps I'll ask Ruth to say a bit about the duties that there will be on local authorities, in terms of ensuring that people are aware of the information.

Thank you. So, as you've highlighted, the Bill does ensure that the local authorities must make those arrangements. So, I'm sure that there will be official discussions, and perhaps Ben might want to comment on the practicalities, but the duty is there. And local authorities, I'm sure, are also very used to complying with their equalities obligations as well.

Okay. In your previous reply, Minister, you said that your intention is to reflect modern life. There are social media sites, for example, that you can use. There are the bills themselves that are posted through people's letterboxes and so forth. So, could you give an example of what kinds of places or where else a local authority could use in order to inform people of changes?

Certainly. So, I know that local authorities would be thinking about using council offices, using libraries, using other places where they have contact with people, housing offices and so on. So there would be, I think, multiple opportunities to make people aware.

Isn't there a risk, however, that local authorities will see this as an opportunity to save on costs and only put a notice on their own website, and then everyone will be expected to go onto the county council website to find this information? Not everyone has access to the internet. There are lots of black spots and notspots in our rural communities. You've just mentioned now about libraries. Libraries are closing, as we know full well from an inquiry that this committee's undertaken quite recently. So, I'm looking for an assurance as to how you can ensure that as many people as possible are reached through the efforts of the local authorities.

So, every council tax payer receives information about council tax as part of their annual bill, so people will have it direct to them in that sense. But what we're asking, of course, is for local authorities to be more creative and think of other ways. So, local authorities have newsletters that often go through people's doors, so that might be another way to get that information direct to them. But I think—

A lot of local authorities are stopping producing those newsletters now, because of cuts.

They're not stopping producing the bills, though, so everybody will get the information with the bill. I do think there will be multiple opportunities to get the information to people and, realistically, by not providing the information in newspapers, for example, there's a relatively small number of people who would have had the information in that way. But we are looking at other ways to get that information out. So, everybody will get some information with the bill. But I know local authorities take very seriously their obligations in this space and they want people to be well informed, so they'll be looking at a whole range of ways to do this.

Diolch.

Are you okay? Sam.

Thank you, Chair, and just to follow on from the questions that Mabon has raised, I just wanted your thoughts on the importance of perception with this issue, rather than perhaps reality. As you say, the number of people who first of all received that free newspaper and who then would turn to that page to read the information may be relatively low—similar to, I'm sure, the number of people watching this session here today online from the comfort of their own home, which is probably relatively low, to say the least. But the perception is really, really important, of transparency and openness, and that's why we do stream these sessions and they are available to people. So, with this particular issue, what are your thoughts on the perception and the impact of that perception of things being less accessible, and how important is that for democracy and people's access to information?

I would say people's access to information is greater than it's ever been, and it's growing all the time, and I think, including in this space, really, in terms of how councils communicate with their local residents. So, I just think that the opportunity to get information now is growing all of the time, and local authorities will try and be creative in the ways that they stick to their duties and their equalities duties, to ensure that everybody is able to access that information.

And do you think this potential change damages that perception at all of access to information and to transparency?

I think, if it were the only way that people were getting information, then certainly, but it's just not reflective of modern life now, I don't think.

Okay. Thanks, Chair.

Thank you, Sam. Joel James.

Thanks, Chair. It was just something that came up at the last evidence session with the newspapers, and it was something that I was quite interested in. You mentioned there that people have more access to information than ever before really, and I just wanted to know how aware you are, or what studies or research have been done about how people understand that information, if that makes sense. Because one of the things that has always been brought up with me is the formality of these council tax statements, or other statutory notices. Right from the start, then, people disengage with it, because they either don't necessarily understand what they're being told, or, 'This looks too complicated and I'm not bothering to read it.' What's being done about that? Is anything being done about not necessarily just meeting the statutory duties in terms of the publication, but making sure people are aware or understand what's being said, if that makes sense?

I think that speaks to the wider work that we're doing actually in terms of the Welsh benefits charter, and that includes trying to make information as accessible to people as possible, and local authorities being proactive in sharing information, but then also ensuring that people are claiming everything that they're entitled to as well. Trying to find that more streamlined way into the reliefs and exemptions and so on, because the changes to universal credit have made it more difficult for people to access the council tax reduction scheme support; many people don't realise that now they have to apply separately for that. So, we're trying to ensure that people are as well informed as they possible can be, and that the system is as easy to navigate as it possibly can be as well.

Thank you, Chair.

Okay, Joel. Thank you very much. Is there anything that you wanted to add, Minister, or that any of your officials wanted to add?

Maybe just to make sure it is very clear that the provisions regarding newspapers do not stop local authorities using newspapers, if that's appropriate. It's not phrased as, 'You must no longer publish in newspapers', it's about publishing electronically and making those appropriate arrangements available.

Okay. Thank you very much. Okay, Minister.

I'll just say thank you to the committee for your work, and we're really looking forward to the next steps of our discussion.

Okay. Well, thank you very much. You will be sent a draft transcript of this evidence session to check for factual accuracy in the usual way.

Great. Thank you. Diolch.

Well, thank you, all, very much for giving evidence to the committee this morning. Diolch yn fawr.