Y Pwyllgor Cyllid

Finance Committee

11/02/2022

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Mike Hedges AS
Peredur Owen Griffiths AS Cadeirydd y Pwyllgor
Committee Chair
Peter Fox AS

Y rhai eraill a oedd yn bresennol

Others in Attendance

Charlotte Barbour Cynghorydd Annibynnol i'r Pwyllgor
Independent Adviser to the Committee
Yr Athro Emyr Lewis Ysgol y Gyfraith Aberystwyth, Prifysgol Aberystwyth
Aberystwyth Law School, Aberystwyth University
Syr Paul Silk

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Ben Harris Cynghorydd Cyfreithiol
Legal Adviser
Christian Tipples Ymchwilydd
Researcher
Georgina Owen Ail Glerc
Second Clerk
Mike Lewis Dirprwy Glerc
Deputy Clerk
Owain Roberts Clerc
Clerk

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.

Cyfarfu’r pwyllgor drwy gynhadledd fideo.

Dechreuodd y cyfarfod am 10:30.

The committee met by video-conference.

The meeting began at 10:30. 

1. Cyflwyniad, ymddiheuriadau, dirprwyon a datgan buddiannau
1. Introductions, apologies, substitutions and declarations of interest

Croeso cynnes i chi i'r cyfarfod y bore yma, a chroeso i'r tystion hefyd am ddod atom ni. Gwnawn ni symud ymlaen drwy'r agenda, ond jest i ddweud y bydd hwn yn cael ei ddarlledu ar Senedd.tv, a bydd Cofnod y Trafodion ar gael ar gyfer y cyhoedd. Ar wahân i addasiadau gweithdrefnol sy'n ymwneud â chynnal trafodion o bell, mae'r holl ofynion eraill o ran Rheolau Sefydlog ar gyfer pwyllgorau yn aros yn yr un lle. Rydyn ni wedi derbyn ymddiheuriad y bore yma oddi wrth Rhianon Passmore, sydd yn methu â bod efo ni. Jest o ran unrhyw beth arall, oes yna unrhyw fuddiannau sydd angen eu nodi? Dwi ddim yn meddwl. Dyna ni. 

A very warm welcome to you to this meeting this morning, and welcome to witnesses. Thank you for joining us. We'll move through the agenda, but just to say that this meeting will be broadcast live on Senedd.tv, and a Record of Proceedings will be published for the public. As usual, aside from the procedural adaptations related to conducting proceedings remotely, all other Standing Order requirements for committees remain in place. We have received an apology this morning from Rhianon Passmore, who is unable to join us. And just to ask whether Members have any interests to declare. I see that there are none. There we are.

2. Papurau i’w nodi
2. Papers to note

Fe wnawn ni symud ymlaen i eitem 2. Eitem 2 ydy papurau i'w nodi. Dwi'n meddwl y gwnawn ni nodi'r rhain oni bai fod gan rywun unrhyw beth i'w holi amdanyn nhw, neu unrhyw nodiadau arnyn nhw. Mae hwnna'n iawn. 

We'll move on to item 2 on the agenda, which is papers to note. We will note these unless Members have any questions to ask or any comments to make. I see that there are no comments. So, we'll move on; those papers are noted. 

3. Bil Deddfau Trethi Cymru etc. (Pŵer i Addasu): Sesiwn dystiolaeth 5
3. Welsh Tax Acts etc. (Power to Modify) Bill: Evidence session 5

Fe wnawn ni symud ymlaen. Fel dwi'n dweud, croeso cynnes iawn i chi'ch dau y bore yma, Emyr Lewis a Syr Paul Silk; mae'n neis eich gweld chi. Fyddech chi'n gallu jest nodi eich enwau a'ch swyddogaethau ar gyfer y record os gwelwch yn dda? Os gwnawn ni gychwyn efo Paul Silk, byddai hynny'n grêt. 

We'll move on. As I said, a very warm welcome to our two witnesses to the meeting this morning, Emyr Lewis and Sir Paul Silk; it's lovely to see you both. Could you give your names and your roles just for the public record please? If we start with Paul Silk please. 

Thank you, Chair. My name is Paul Silk. I was, at the beginning of the century, the clerk of the National Assembly, as it then was, and I've worked in parliamentary administration all my life.

Bore da. Emyr Lewis ydw i, dwi'n bennaeth Adran y Gyfraith a Throseddeg ym Mhrifysgol Aberystwyth. 

Good morning. I'm Emyr Lewis, I'm the head of the Department of Law and Criminology at Aberystwyth University. 

Diolch yn fawr iawn, a chroeso cynnes iawn i chi y bore yma. Diolch i chi am roi eich amser i ddod i roi tystiolaeth i ni; mae'n dda eich cael chi yma. Rydyn ni'n mynd i fynd drwy ychydig o gwestiynau sydd gennym ni ynglŷn â'r Bil yma sydd gerbron. 

Thank you very much. A very warm welcome to the two of you this morning, and thank you for giving your time to give evidence to us; it is wonderful to have you here. We'll go through a few questions that we have with regard to the Bill before us. 

I would like to understand the constitutional issues relating to primary and secondary legislation. I'd like to open with a question to you both. In your written evidence to the committee, you raised concerns regarding the constitutional implications of Government making sufficient changes to primary legislation via regulations. Could you outline some of those concerns and how they may relate to the proposal in this Bill? I'll leave it up to you two, whichever one of you wants to go first. It's entirely up to you. There we are; Paul first. 

It's a concern that I have had, and I think many people have had for many years, that's there's a gradual erosion of primary legislative functions of legislatures and their being taken over by Executives through secondary legislation—the growth of what are referred to as Henry VIII powers, so the powers to amend primary legislation by secondary legislation. It's something that has happened over 100 years. It's something that has caused concern at Westminster, it's caused concern in the Scottish Parliament, and it has caused concern in the Senedd as well. My concern, when I first looked at this Bill, was that this was another example of this in areas that are particularly contentious—the areas of taxation—and the way in which the Bill also allows this to be done retrospectively, which is, I think, the first time that a piece of secondary legislation can retrospectively affect taxation powers. So, this is an example for me, therefore, of a more general concern that I have about the way in which the Executive is taking over functions that I think properly belong to the legislature. 

Emyr, oes gennych chi rywbeth i'w adio at hynny?

Emyr, do you have any comments to add to that?

Oes, dau beth yn fyr iawn—y pwynt cyntaf i adleisio beth mae Paul newydd ei ddweud, ac yn ail, i ddeall y rhesymau dros y pryder yma. Mae'r rhesymau dros y pryder yma yn ymwneud â democratiaeth a beth yw swyddogaeth corff etholedig mewn democratiaeth fodern, lle mae gennym ni gymdeithas sydd yn gynyddol gymhleth, ac sydd yn cael ei rheoleiddio mewn ffyrdd mwy cymhleth, ac mae hynny yn arwain Llywodraethau i fod eisiau bod yn gallu gwneud mwy o bethau heb orfod mynd drwy'r niwsans o ymgynghori gyda'r cynrychiolwyr democrataidd ar y naill law, ac mae rhywun yn gallu gweld synnwyr cyffredin weithiau mewn hynny, ond, ar y llaw arall, mae'r cwestiwn creiddiol yn codi: ble mae'r ffiniau? Ble mae'r ffiniau dros yr hyn y dylid ei ganiatáu i Lywodraethau ei wneud sydd, yn y lle cyntaf, yn briod faes y ddeddfwrfa ddemocrataidd?

Ac mae'r ail bwynt yn ymwneud â—unwaith eto yn adleisio rhywbeth ddywedodd Paul—chymryd y camau hyn ym maes trethi. Mae'n rhan o wead cyfansoddiad y Deyrnas Gyfunol nad oes grym gan y Goron i drethu'r bobl heb ganiatâd y Senedd. Mae felly ers y Bill of Rights yn yr ail ganrif ar bymtheg, a dyw e ddim wedi newid. Ac mae'n ymddangos i mi fod yr hyn y gofynnir amdano yn y ddeddf yma, tra bod ambell i agwedd ohoni'n gwneud synnwyr cyffredin o ran cymhlethdod a gwneud pethau yn rhwydd, wedi dweud hynny, mae llawer iawn o'r ddarpar ddeddf yn fan yma yn mynd â ni at bwynt sydd fel petai’n tynnu'n groes i'r egwyddor yna mai ffynhonnell penderfyniadau pwysig ynglŷn â threthi yw'r ddeddfwrfa, ac nid y Llywodraeth. 

Yes, two points to make very briefly—the first point just to echo what Paul has just said, and, in the second instance, to understand the rationale for this concern. The rationale relates to democracy and what the function of an elected body is in a modern democracy, where we have a society that is increasingly complex, and is regulated in ever more complex ways, and that leads Governments to be wanting to do more things without having to go through the nuisance of consulting the elected representatives on the one hand, and one can see the common sense in that sometimes, but, on the other hand, the core question arises of where the boundaries are. Where is the threshold in terms of what Governments should be allowed to do that, in the first instance, is the appropriate role for the democratic legislature? 

And the second point relates—to echo another thing that Paul said—to taking these steps with regard to taxation. It is part of the constitutional structure of the United Kingdom that the Crown doesn't have the power to raise taxes on the people without the permission of the Parliament. It has been so since the Bill of Rights in the seventeenth century, and that hasn't changed. And it appears to me that what is requested in this Bill, whilst some aspects of it make common sense in terms of complexity and making things easier, much of this prospective legislation takes us to a point that is contrary to that principle that the source of important decisions with regard to taxation is the legislature, and not the Government. 

10:35

May I add one point just to what Emyr is saying, with which I entirely agree? It's not just the members of the legislature who benefit from the legislature considering legislation, it's all the stakeholders outside, because it's a transparent and open process, and consultation that happens between the Executive and outside stakeholders is not as transparent as that. So, it's not just, as it were, the ruffled feathers of members of the legislature that I would be concerned about, but the process of the legislation. 

Looking at some of that scrutiny element, and the Bill enables Welsh Ministers to amend Welsh tax Acts through secondary legislation, does this approach to legislating pose challenges for the Senedd and stakeholders—and I think you've touched on that just then—to provide effective scrutiny? And I think it goes a bit further into what you were just saying, and then contributors to our consultation stressed that the procedures proposed in the Bill need to strike that appropriate balance. Do you think that that the Bill actually does that? Does it strike that balance or not? Paul, if you wanted to continue, and then we'll come to Emyr afterwards. 

I was very interested when I read Emyr's evidence, because there are areas that he has identified where the Bill—and I think he's correct—does strike the right balance. But I think that when you are scrutinising it as a committee you need to ask yourselves, 'Well, what are the circumstances in which this could possibly be used?' Put to one side what the Government says in its policy statement as what they intend to do, because they may not be the Government in the future; there may be different people who are taking different decisions. What are the most extreme scenarios that the powers in this Bill could be used? Imagine those, and, if you are happy with those, as members of the legislature, then give it a green light. But if you are at all concerned that some of those powers may go too far, then perhaps you need to make the light amber or red.  

What sort of—? I'll come to Emyr in just a second, but I'm interested in what are the extremes. Have you thought what the extreme element would be? What could you do with this, if you were that way inclined? 

I thought that perhaps you should turn to Emyr, because—

—he's done some of that more hard thinking than I have.  

There we are. 

Emyr, os ydych chi eisiau cymryd y cwestiwn yna, ac o bosib yr un atodol yna ynglŷn â lle byddai'n gallu mynd os oedd yn cael ei gymryd i'r extreme, felly.

Emyr, if you want to respond to that question, and possibly the supplementary with regard to where this could go if it was taken to the extreme.

10:40

Iawn. Wel, yn gyntaf oll—unwaith eto i adleisio'r hyn y mae Paul wedi’i ddweud—mae'r penderfyniad ynglŷn â lle mae’r cydbwysedd yn gywir yn benderfyniad i'w wneud gan y Senedd yn y pen draw, ond hefyd i’w ystyried gan y pwyllgor yma, fel ceidwaid, os liciwch chi, ein democratiaeth ni yn wyneb y broses yma o geisio symud pwerau.

Mi wnaf i roi un enghraifft ichi—. Sori, cyn hynny, fel pwynt cyffredinol, po fwyaf llydan bo'r pŵer y mae'r Llywodraeth yn ei gael, po fwyaf y perygl bod y pŵer yna yn gallu cael ei gamddefnyddio gan Lywodraeth arall yn y dyfodol. Ac yn fy marn i, mae yna ddau a hanner o’r pwrpasau y mae’r Llywodraeth yn gofyn amdanyn nhw yn fan hyn wedi’u drafftio’n rhy eang, a dwi'n mynd i hyn yn fanylder yn y dystiolaeth ysgrifenedig.

Ond mi wnaf i roi un enghraifft ichi. Y pŵer yn galluogi newid—. Os oes achos llys yn mynd yn erbyn y Llywodraeth, neu'n mynd mewn unrhyw ffordd a dweud y gwir, mae'n galluogi'r Llywodraeth, drwy reoliad, i ddiwygio un o Ddeddfau trethi Cymru o ganlyniad i hynny. Does dim cyfyngiad yn cael ei osod ar y math o ddiwygiad y gellir ei wneud, ac eithrio na ellir ymyrryd â chyfansoddiad Awdurdod Cyllid Cymru ac na ellir newid rhai mathau o drothwyon treth.

Cymerwch chi enghraifft fod Awdurdod Cyllid Cymru wedi defnyddio ei phwerau, ac mae ganddi hi bwerau eithaf pellgyrhaeddol, i fynd i annedd rhywun neu i eiddo busnes rhywun ac i gymryd dogfennau yno—ac mae yna brosesau sy’n eu galluogi nhw i wneud hyn mewn rhai achosion heb roi rhybudd—a dywedwch chi fod y person o dan sylw, y trethdalwr, yn honni bod y camau yma wedi cael eu cymryd mewn ffordd nad oedd yn unol â'r Ddeddf, ac felly maen nhw'n mynd â'r awdurdod cyllid i'r llys ac maen nhw’n ennill eu hachos, ac mae Gweinidogion Cymru yn dweud, 'Wel, dydyn ni ddim yn licio hynna. Dŷn ni'n credu dylai fod gan Awdurdod Cyllid Cymru bwerau mwy cryf, fel dyw'r math yma o achos ddim yn digwydd eto.' Felly, maen nhw'n diwygio'r Ddeddf casglu trethi, y brif Ddeddf, er mwyn cryfhau pwerau Awdurdod Cyllid Cymru i fynd mewn i dai annedd pobl ac i gymryd eiddo. Nawr, mae'r awdurdod cyllid wedi derbyn y pwerau hynny sydd yn amharu ar breifatrwydd, ymreolaeth yr unigolyn—pob math o ryw egwyddorion tebyg—oherwydd bod Senedd Cymru, sydd wedi'i hethol yn ddemocrataidd, wedi penderfynu ei bod yn briodol fod yr awdurdod yna yn cael y pwerau hyn ar ôl ymgynghori'n agored, fel y mae Paul wedi'i ddweud. Ydy hi'n beth cywir bod Llywodraeth Cymru, heb o anghenraid orfod ymgynghori o gwbl, yn gallu cynyddu'r pwerau hynny yn syml oherwydd eu bod nhw wedi colli achos llys ar y pwynt?

Nawr, mae'r pŵer yma'n un eang tu hwnt, a dim ond un enghraifft ydy honno, a fyddai hi ddim yn gwneud y tro i chi i ddweud, 'Wel, o'r gorau te, mi wnawn ni jest gyfyngu ar hwnna', oherwydd rhowch digon o amser i ddyn a byddwn ni'n ffeindio degau o bethau y byddech chi'n dweud, 'Wel, na, dydy hi ddim yn briodol', neu efallai y byddech chi fel pwyllgor yn meddwl dydy hi ddim yn briodol, mai gan y Llywodraeth y mae'r pŵer yna, 'Mae angen i hwnna fynd yn ôl i'r Senedd i'w drafod yn ddemocrataidd.' Felly, dyna enghraifft i chi o'r math o beth yr oedd Paul yn sôn amdano.

Well, yes, first of all—once again to echo what Paul has said—the decision with regard to where the balance is struck is a decision to be made by the Senedd ultimately, but also to be considered by this committee, as the guardians, if you will, of our democracy in the face of this process of trying to shift powers.

I will give you one example—. Sorry, before doing that, as a general point, the wider ranging the power that the Government receives, the greater the risk that that power could be misused by another Government in future. And in my view, two and a half of the purposes that the Government has requested have been drafted too broadly, and I go into detail on that in my written evidence.

But I'll give you one example. The power enables—. If there is a legal case that goes against the Government, or goes any way, it enables the Government, through regulation, to amend one of the Welsh tax Acts as a result of that. There is no limit placed on the kind of amendment that could be made, with the exception that the constitution of the Welsh Revenue Authority cannot be amended and some types of tax thresholds can't be adapted either.

If you take as an example that the WRA used its powers, and it has quite far-reaching powers, to enter someone's property or business premises to take away documentation—there are processes that enable them to do that without notice—and let's say that the person concerned, the taxpayer, alleges that the steps had been taken in a way that wasn't done in accordance with the legislation, so they take the WRA to the courts and they win their case, and Welsh Ministers say, 'Well, we don't like that. We believe that the WRA should have stronger powers so that this type of case doesn't arise in future.' So, they then amend the tax collection legislation, the main legislation, to strengthen the powers of the WRA to enter people's homes or premises to take away their property. Now, the WRA has received those powers that impact upon the privacy and autonomy of the individual—all sorts of related principles—because the Senedd, which has been democratically elected, has decided that it is appropriate that the authority receives these powers following open consultation, as Paul has said. Is it correct then that the Welsh Government, without necessarily having to consult, can increase those powers simply because they had lost a court case on that point?

Now, this power is a very wide-ranging one, and that's only one example, and it wouldn't do for you to say, 'Well, we'll just limit that particular power', because, if you were to give us enough time, we could find tens of examples where perhaps you could say, 'Well, this isn't appropriate', or you as a committee might decide that it is inappropriate for the Government to have that power, and that that has to go back to the Senedd to be discussed in that democratic forum. So, that's an example of the kind of thing that Paul was talking about.

Diolch yn fawr. I symud ymlaen o hynny, yn ystod yr ymghynghoriad, roedd yna lock wedi ei ystyried.

Thank you very much. To move on from that, during the consultation, a lock had been considered.

If there was a lock prior to making regulations, this would require the Senedd to vote to unlock the use of the power so that the general principles of the proposed regulation would be scrutinised and approved before it could be made. Should that approach be incorporated into the Bill that might mitigate some of the things that Emyr was just talking about and the use of secondary regulation making powers—

—Emyr, a fyddai hynny yn helpu i allu symud hyn yn ei flaen ac i fod ychydig bach yn fwy o sgrwtini ar y Llywodraeth ynglŷn â hyn?

—Emyr, would that help to be able to move this forward and to allow greater scrutiny of the Government on this?

10:45

Mi allai wneud, ond byddai rhywun angen gweld y peth wedi ei ddrafftio yn ofalus, oherwydd mi allai ddelio â'r cwestiwn yma o ddiwygio'r gyfraith a chynnal blaenoriaeth y Senedd dros ddeddf trethiannu. Mewn geiriau eraill, mae'r Llywodraeth yn dweud wrth y Senedd, 'Hoffen ni ddefnyddio'r pwerau ar gyfer y dibenion yma,' ac mae'r Senedd yn dweud, 'O'r gorau, te, gwnewch hynny', a dwi'n gweld hynny yn ffordd rhywbeth yn debyg, a dweud y gwir, i'r ffordd mae Senedd Llundain yn medru gosod sêl ei bendith rhag blaen ar ddiwygiadau trethiannol cyn bod y rheini'n dod yn rhan o Ddeddf Gyllid Llywodraeth San Steffan. Mae'n delio â hynny, ond dydy o ddim yn delio â dau beth. Dydy o ddim yn delio'n ddigonol gyda'r math o newid dwi wedi sôn amdano fo sydd yn golygu amharu go sylweddol ar sefyllfa y dinesydd; dydy o ddim chwaith yn delio â phwynt Paul ynglŷn â chraffu. Fel roeddwn i'n dweud, po fwyaf yr ymyrraeth ar y dinesydd, po fwyaf yr angen ar waith craffu wrth wneud diwygiadau.

Felly, mi allasai weithio. Mi fyddai'n well o safbwynt cynnal blaenoriaeth, primacy, y Senedd fel deddfwrfa, gan mai hi ac nid y Llywodraeth fydd yn penderfynu pryd mae'r 'switsh' yn cael ei gosod, os caf i ddefnyddio gair arall yn lle 'clo'. Felly, bydd y switsh yn cael ei osod ymlaen, ond fyddai fo ddim, yn fy marn i, ynddo'i hun, yn ddigonol i ddelio â'r ardaloedd hynny dan y Mesur yma lle mae yna bwerau eang yn cael eu rhoi neu yn cael eu gofyn amdanyn nhw gan y Llywodraeth.

It could, but one would need to see this being drafted carefully, because it could deal with this question of amending the law and maintaining the primacy of the Senedd over taxation law. In other words, the Government tells the Senedd, 'We would like to use these powers for these aims', and the Senedd then says, 'Well, yes, okay, do that,' and I see that that would be a similar way forward to that seen in the London Parliament, which can approve taxation changes before they become part of the Westminster Government's Finance Act. It deals with that, but it doesn't deal with two issues. It doesn't deal sufficiently with the kinds of changes that I've mentioned that would have a significant impact on the citizen's position, nor does it deal with Paul's point with regard to scrutiny. And, as I said, the greater the impact on the citizen, the greater the need for scrutiny in making amendments.

So, it could work. It would be better in terms of ensuring the primacy of the Senedd as a legislature, as it would be the Senedd and not the Government that would be deciding when the 'switch' would be used, if I can use another word instead of 'lock'. So, the switch would be turned on, but it wouldn't, in my view, in and of itself, be sufficient to respond to those areas under this Bill where there are very wide-ranging powers being requested by the Government.

Diolch, Emyr. Paul, did you have anything to add on that, or your thoughts on a lock or a—?

I agree with what Emyr has said, once again. I guess somewhere along today's proceedings we will disagree about something, but we're still agreeing. I think the removal of the lock and the replacement by the four conditions was certainly an improvement from the original position that the Government adopted. Introducing the lock as well as the four conditions—well, the devil will be in the detail of seeing what was in that lock, but I can't quite see how that lock would do anything different from the affirmative resolutions that the Assembly would need to pass in any case. So, you would be imagining, I guess, a lock that said, 'Well, before you can introduce legislation you must have an affirmative resolution in the Senedd, but, when that piece of legislation is introduced, then there must be another affirmative resolution in the Senedd to approve it.' It would be an extra step, but I'm not quite sure what benefit it would bring.

Okay, thank you very much. At that point, then, I'll bring Peter in with some questions. Oh, hang on, you're on mute. What's happened there? There we are.

Thank you, Chairman. Good morning, both. Really interesting inputs already, making us think a lot. We, obviously, have taken quite a lot of evidence, and there is still anxiety by many people about subordinate legislation, secondary legislation, instead of primary legislation, and we really could do with drilling down even deeper into this. And Paul, I know in your evidence, I think you suggested perhaps a primary legislation passed expeditiously would be preferable to the secondary route, and I think we've heard about that from you already. But do you feel a primary legislative mechanism such as a dedicated fast-tracked or expedited Bill process is a better way of making urgent changes to the Welsh tax Act than the proposal currently in the Bill? Would it allow us to still act fast enough for the purpose of the Bill anyway? 

10:50

Good morning. Yes, I think it would. You have—I was going to say, refreshed my memory. I didn't refresh my memory; I learnt that you have a Standing Order about Government emergency Bills, and that allows Bills to be passed expeditiously in the Senedd. It allows them all to be done in one day in the Senedd, but it doesn't require them to be done in one day in the Senedd. It's quite flexible, your Standing Order 26.95. So, personally, I think that would be preferable. I'm not sure that in all circumstances that are envisaged under the current Bill—there wouldn't even necessarily need to be emergency Bills. There undoubtedly would be circumstances when emergency Bills would be necessary when things were done in London that affected adversely the tax take in Wales. But the procedures are there, under the normal legislative processes, so that secondary legislation would not, I would have thought, be necessary.

Yes. Thanks for that. This line of questioning is mainly for you, Paul, but I know I've got some for Emyr afterwards. But just to follow on from that, the evidence mentioned that a finance Bill would be a useful legislative tool to allow the Welsh Government to react to external factors and protect tax revenues and funding for public services, but in your view, would this be an appropriate mechanism to amend the Welsh tax Acts?

An annual finance Bill, you mean, Mr Fox?

I think one of the issues is that there are comparatively few taxes that are at present devolved, and there's a whole argument about whether there should be more taxes that are devolved and so on. But leaving that to one side, there are relatively few taxes devolved at present. So, whether an annual finance Bill is a wise use of time in present circumstances, I'm not sure. And, of course, it wouldn't allow the Senedd, which is the purpose of this Bill, to react urgently to circumstances that arise that adversely affect its tax take and so on. So, I'm not sure the finance Bill route would be sensible in these circumstances.

Na, dwi'n hapus i aros. Dwi'n credu bod beth mae Paul yn ei ddweud yn synhwyrol iawn.

No, I'm content to wait. I think that what Paul says is sensible.

No, no. Thank you for that. Just following on a little more, and forgive me if we repeat ourselves a bit, but it's just trying to really get down under it a bit. But you noted also in your evidence that the power to impose penalties would normally be reserved for primary legislation. What safeguards could be implemented to protect taxpayers if this Bill is enacted?

Well, the safeguards would have to be, by the nature of this Bill, in the secondary legislation, and that gets back to the concern that both Emyr and I have expressed about whether there is adequate scrutiny—would be adequate scrutiny—of those safeguards if the secondary legislation route is used. I don't want to appear to accuse this Government or any other Government of bad faith about these things; I'm sure they actually absolutely mean what they say in their explanatory memorandum and so on to you. But circumstances arise that weren't anticipated at the time, and what the legislative process should try to do is to protect the citizen from those—

10:55

I think Paul has just frozen. We'll just take a second. Okay. Would the technical team be able to help? Mike. Can we—? There we are. Mike.

While we're waiting for that, can I ask a question to Professor Lewis? We've seen in the past that people have found ways around paying income tax, haven't they, or tried to? You remember when people were paid in gold Krugerrands, and therefore it counted at the face value of the Krugerrand, rather than its actual value, which was at least two orders of magnitude higher. Don't you think there's a need for Government to act immediately on things like that?

What you're talking about, Mr Hedges, is the ingenious ways people find in order to minimise or avoid the amount of tax they pay. There are two types of those. There are those that are against the law, and you can end up in jail for doing them, and there are those that are not. There are things that you're able to do—taking advantage, if you like, of loopholes in the law, as it's classically called. And, of course, it is a permanent battle between Treasuries, who want to maximise the amount of money that they can make in order to spend it on public good, and people who want to keep as much money as they can, and have got enough and want to spend as much money as they can on tax advisers who can help them find clever ways through. There is a moral line, if not a legal line, if you like, between the way in which all of us, to a lesser or greater extent, do things in order to pay less tax, like, for example, we give to charity—one of the consequences of that is that we pay less tax—and the too-clever-by-half elaborate schemes that are put in place in order to avoid paying substantial amounts of tax. And it is quite right that Government should concern itself with trying to prevent that from happening—the latter thing from happening.

Sorry, Chair, but I just wanted to bring that in as we had a few moments.

That's okay. I think Paul's back with us, so hopefully we can hear him now. If you wanted to pick up—. I think it was probably just the start of the answer we got, so—

I think we got most of the gist, Paul, before you got cut off. I don't know if there's anything you felt we might not have caught in your last response.

I was conscious—living in Powys, you never can be sure about your connections to Wi-Fi. No, if you think I—. I'm quite happy.

I think we should be ok there. I'll move on to another point, and it's one we've asked quite a lot of people. Should consideration be given to introducing a sunset clause applying to the regulations made under the Bill? And what could be the benefits or disadvantages of that approach? 

A sunset clause in respect of each regulation under the Bill, or a sunset clause in respect of the Bill itself?

11:00

I'd be advised on that, but I would assume the Bill itself, but if a professional wants to tell me different, it might be that we want it on the specifics.

Well, I think a sunset clause is a good device where you're not sure whether something is being used well or not. So, it is something that we see sometimes in legislation and can be desirable, but I personally would prefer to see things got right in the first place, rather than having a sunset clause put into them, just to see, 'Well, let's have a go at it and see whether it works or not.' So, my advice would be to get it right in the first place.

And maybe on the regulations as well, possibly, just to come in—sorry. A sunset clause on the Bill and also potentially on the regulations as they come through. So, if that would change your answer slightly, Paul, then we'll come back.

Dwi'n credu cyn belled â bod y Bil yn y cwestiwn, does gen i ddim byd i'w ychwanegu at beth mae Paul wedi'i ddweud—yr ail orau, neu'r trydydd orau, neu'r pedwerydd orau fyddai cael cymal machlud. O ran y rheoliadau, dydy e ddim yn gwneud synnwyr i mi i gael cymal machlud yn y rheini, achos bwriad y rheoliadau ydy newid prif Ddeddfau. Os ydych chi'n newid prif Ddeddfau a dŷch chi'n dweud, 'Ond mi fydd y newid yma'n dod i ben ymhen dwy flynedd', beth sy'n digwydd ymhen dwy flynedd? Ydyn ni'n mynd nôl at y sefyllfa lle'r oedden ni? Dŷn ni wedi newid y brif Ddeddf, er enghraifft, er mwyn gwneud deddfwriaeth Cymru yn gydnaws â deddfwriaeth ryngwladol, ond ymhen dwy flynedd, fydd hynny'n dod i ben. Felly, dwi ddim yn credu bod hwnna'n gwneud synnwyr yng nghyd-destun y rheoliadau.

Dwi yn ymwybodol bod Llywodraeth Cymru wedi bod yn defnyddio pwerau dan y Ddeddf coronafeirws i newid deddfwriaeth gynradd am gyfnodau byr o amser er mwyn galluogi pethau fel addysg i barhau i ddigwydd a'r gwasanaeth iechyd i weithredu adeg coronafeirws, ac mae hwnna'n fater cyfan gwbl wahanol. Dwi ddim yn gweld sut gall e weithio.

I believe as far as the Bill is in question, I don't have anything to add to what Paul has already said—the second best, or third best, or fourth best option would be to have a sunset clause. In terms of the regulations, it doesn't make sense to me to have a sunset clause in those, because the intention of the regulations is to change primary legislation. If you change the main legislation and you say, 'Well, this change will come to an end in two years', then what happens in two years? Do we go back to the previous situation? We have changed this legislation in order, for example, to align Welsh law with international law, but in two years' time, that will come to an end. So, I don't think that makes sense in the context of the regulations.

I am aware that the Welsh Government has been using powers under the coronavirus legislation to change primary legislation for short periods of time in order to enable things such as education to continue to happen and to enable the health service to operate during the coronavirus period, and that is an entirely different situation. I don't see how it can work in this instance.

That's really helpful. Paul, is there anything you want to come back with on on that? 

No, I agree, absolutely.

That's great. That's really helpful input. I'm going to move us on to a little bit more around tax avoidance, if I could. I know that evidence has highlighted the potentially broad interpretation of the term 'tax avoidance' in the Bill. Should the term be defined in the Bill to clarify or potentially limit the Welsh Government's ability to make laws in this area? If so, how would you suggest defining it? 

Os awn ni at Emyr, oherwydd roedd e wedi dechrau sôn am y math yma o beth yn y cwestiwn gan Mike yn gynharach.

If we come to Emyr, because he had started to talk about that kind of issue previously in response to Mike's question.

Y pwynt ydy, mae osgoi treth, fel mae Mike Hedges eisoes wedi awgrymu, yn rhywbeth eang iawn, iawn ei rychwant, o ran petaswn ni'n ceisio dod o hyd i bob un gwahanol ffordd y mae modd gwneud hynny. Ond beth sydd gennym ni yn y brif Ddeddf, yn y Ddeddf Casglu a Rheoli Trethi (Cymru) 2016—maen nhw'n adrannau newydd sydd wedi cael eu rhoi i mewn i'r Ddeddf gan ddeddfwriaeth ddiweddarach—ydy agwedd tuag at osgoi trethi sydd ddim yn dibynnu ar adnabod mathau arbennig o osgoi, sy'n gosod templed, os liciwch chi, neu ryw fath o egwyddor yn ei le. A beth mae'n ei wneud ydy creu'r cysyniad yma o gamau dŷch chi'n eu cymryd mewn perthynas â'ch materion treth chi sydd, yn y lle cyntaf, wedi'u gwneud gyda'r bwriad o osgoi treth ac, yn yr ail le, sydd yn artiffisial o ran eu natur. Ac os ydych chi'n meddwl am beth yw osgoi treth, dyna beth ydy o. Beth ydy o ydy bod pobl yn gwneud pethau nid am unrhyw reswm arall ond osgoi treth, ac mae e'n artiffisial. Dyma le mae'r ffin foesol, os liciwch chi, roeddwn i'n sôn amdani.

Felly, oherwydd bod gennych chi—. Ac o dan y Ddeddf honno, mater i Awdurdod Cyllid Cymru ydy profi bod rhywbeth yn artiffisial; nid mater i'r trethdalwr i wrthbrofi hynny. Nawr, oherwydd bod gennym ni'r diffiniad trosgynnol eang yna o 'osgoi treth', mae'n anodd gen i weld beth fyddem ni yn ei ennill drwy roi'r un diffiniad neu ddiffiniad gwahanol yn y Bil yma. Yr hyn y byddwn i'n argymell sydd ei angen yn y Bil yma ydy mwy o eglurder ynglŷn â phryd y gellir defnyddio'r pŵer yma, a beth ellir ei wneud drwy ddefnyddio'r pŵer yma er mwyn delio ag osgoi trethi. Pe bai'r cymal yn y Bil wedi ei ddrafftio fel rhywbeth sydd yn ymwneud â chau'r tyllau bach mae modd mynd drwyddyn nhw, mi fyddai'n fater gwahanol, ond dydy o ddim. Fel gyda'r pŵer arall roeddwn i'n sôn amdano gynnau yn ymwneud ag achosion llys, mae'r pŵer yma'n un eang iawn, yn galluogi bron â bod unrhyw ddiwygio o'r brif ddeddfwriaeth, a byddai hynny felly hefyd yn golygu, er enghraifft, y byddai modd newid yr hyn dwi newydd ei ddisgrifio fel diffiniad trosgynnol o osgoi treth, drwy, er enghraifft, gosod y ddyletswydd ar y trethdalwr i brofi bod rhywbeth ddim yn artiffisial yn hytrach nag ar Awdurdod Cyllid Cymru. A dyna'r math o newid a ddylai fod, byddai rhywun yn dadlau, yn cael ei wneud ar lawr y Senedd ac nid drwy reoliadau.

Felly, yn fyr, dwi'n credu os bwriedir mynd ymlaen gyda'r pŵer yma o gwbl, yna mae angen eithrio mwy o'r brif ddeddfwriaeth o'r hyn y gellir ei newid. Dyna efallai un ffordd drwodd.

The point is that tax avoidance, as Mike Hedges has already suggested, is a very wide-ranging issue in terms of its scope, in that if we were to try to find every single way of doing that. But what we have in the Tax Collection and Management (Wales) Act 2016—they are new sections that have been included in the Act by later legislation—is an attitude towards tax avoidance that doesn't depend on identifying specific kinds of avoidance, which sets out a template, if you will, or puts a principle in place. And what it does is it creates this concept of steps that are taken in relation to your own tax affairs that, in the first instance, have been done with the intention of avoiding tax and, in second instance, are artificial in nature. So, if you think about what tax avoidance is, that's what it is. People do things for no other reason than to avoid tax, and they're artificial. That's where the moral boundary is that I mentioned earlier.

So, because you have—. Under that legislation, it's a matter for the Welsh Revenue Authority to prove that something is done artificially; it's not a matter for the taxpayer to disprove that. And because we have that very wide-ranging overarching definition of 'tax avoidance', then it's difficult for me to see what we would gain by placing the same definition or a different definition in this Bill. What I would recommend is needed in this Bill is greater clarity about when this power could be used and what could be done through the use of this power to deal with tax avoidance. If the clause in the Bill were drafted as something related to closing the loopholes that it's possible to use, it would be a different matter, but it doesn't. As with the other power that we were talking about earlier in terms of the court cases, this is a very wide-ranging power, enabling almost any reform of the main legislation, and that, perhaps, could mean, for example, that it could change what I've just described as an overarching definition of tax avoidance, by, for example, placing the duty on the taxpayer to prove that something isn't done artificially rather than placing the duty on the WRA to prove that it is. And that's the kind of change, one might argue, that should be done on the floor of the Senedd and not through regulation.

So, in summary, I think that if this power is to be pursued, then more of the main legislation needs to be exempted in terms of what can be amended. That's perhaps one way forward.

11:05

Thanks for that. That was really comprehensive. So, do you think that the definition should be linked to the existing avoidance provision, such as the general anti-avoidance rule?

Wel, dwi'n credu y byddai'n help i—. Byddai'n help, dwi'n credu, ein bod ni yn cyfyngu ar beth yw'r newidiadau sy'n gallu cael eu gwneud yn hytrach nag yn ceisio cael diffiniad newydd, a dweud y gwir. Dwi'n credu mai dyna lle ydw i ar hyn—dwi'n credu. Dwi ddim yn credu byddai diffiniad o osgoi treth o fewn y ddeddfwriaeth yma yn mynd â ni lawer pellach.

I think it would help to—. It would be a help, I believe, if we were to limit the range of changes that could be made rather than trying to formulate a new definition, truth be told. I think that that's where I am on this—I think. I don't think that a definition of tax avoidance within this legislation would take us much further.

Yes, I would, and I think that the most recent comments that Emyr made illustrate the problems that exist if you have a wideness in the possibility of definition under the existing powers to make secondary legislation. So, I think the case is very well illustrated by this discussion of what avoidance means.

Yes. I'll move on. And, Emyr, back to you on this one, actually: your evidence also noted that the purpose to respond to decisions of the courts or tribunals set out in the Bill is very broad. Can you explain why you think this is and how it could be improved?

Wrth gwrs. Yn y lle cyntaf, dwi'n cyfeirio at beth soniais i amdano fe gynnau, ynglŷn â pham nad oes yna ddim ffiniau ar y math o sefyllfa, ac roeddwn i'n sôn am yr enghraifft o golli achos yn ymwneud â gweithredu pwerau mynd i gartrefi pobl. Felly, does dim ffiniau arno fo. Hefyd mae'r elfen ôl-weithredol, retrospective, yn berthnasol fan hyn, ond efallai eich bod chi eisiau trafod honno ar wahân, dwi ddim yn gwybod, ond os liciech chi, fe wnaf i sôn rhywfaint am hynny.

Of course. In the first instance, I refer to what I mentioned earlier with regard to there not being any limits on the type of situation, and I talked about the example of losing a court case in terms of powers to enter people's premises. So, there is no threshold or boundary on this. Also, this retrospective element is relevant here, but perhaps you would want to discuss that later on, I don't know, but if you like, I will talk a little about that.

11:10

Dyna ni, iawn. Felly, dwi'n credu fy mod i wedi delio â pha mor eang ydy hwn o'r blaen yn yr enghraifft a wnes i ei rhoi. Gallaf i roi mwy o enghreifftiau, ond dwi'n mynd i'w gadael hi yn fanna dwi'n meddwl.

Okay. So, I think I have dealt with how wide ranging these powers are in the example I gave. I can give you additional examples if you'd like, but I'll leave it there for now.

Thank you for that, and I apologise if some of these questions are a bit repetitive, it's a job for—

That's fine, don't worry.

—lay people like me to track what I've already said. [Laughter.]

You're doing well.

Rydych chi'n gwneud yn dda.

You are doing well.

So, moving into the retrospective side of things, what are your views on the Bill enabling Welsh Ministers to make changes retrospectively, and what are the potential risks from the use of these powers?

Dwi'n meddwl bod eisiau inni wahaniaethu dau fath o newid. Y newid cyntaf ydy'r newid sydd ddim yn cael effaith andwyol ar y trethdalwr neu ar unigolion neu ar bobl Cymru o safbwynt eu hawliau a'u sefyllfa nhw. A'r math arall ydy'r hyn sydd angen ei wneud heb wneud hynny ond er mwyn diogelu'r system drethiannol Gymreig rhag, ar y naill law, fod yn groes i gyfraith ryngwladol a heb, ar y llall, fod yn—. Ydy'r cysylltiad wedi torri neu ydych chi'n dal i—

I think we need to differentiate between two kinds of changes. The first change is the change that doesn't have a detrimental impact on the taxpayer or on the individual or on the people of Wales from the point of view of their situations and their rights. The other kind is what needs to be done that doesn't have that impact but to safeguard the Welsh tax system from, on the one hand, operating contrary to international law, and on the other—. Has the connection been lost?

Ocê, mae'n ddrwg gen i. Roeddwn i'n clywed rhyw sŵn. A heb, ar y llall, fod yna golled fawr yn digwydd i gyllid Cymru, i goffrau Cymru oherwydd newidiadau oedd neb yn eu disgwyl yn y system drethiannol yn Llundain. Rwy'n credu yn y ddwy achos yna fod yna le dilys dros ddweud y dylai fod pwerau yn gallu cael eu gweithredu, os ydy o'n iawn i roi'r pwerau o gwbl, mewn ffordd ôl-syllol, ôl-weithredol, a dwi wedi egluro pam yn fy nhystiolaeth.

Lle dwi'n pryderu mwy amdanyn nhw ydy yng nghyd-destun y pwerau eang yma, ac yn arbennig felly, er nad oes modd defnyddio'r pwerau yma i osod cosb ychwanegol ar drethdalwyr, fod modd defnyddio'r pwerau yma er mwyn gosod mwy o dreth ar drethdalwyr fel eu bod nhw'n ddyledus i dreth lle na fydden nhw ddim wedi bod. Felly, mae hyn yn torri yn groes i'r egwyddor dan y gyfraith sy'n cael ei hadnabod fel 'rheolaeth y gyfraith' yn y Gymraeg, neu 'the rule of law' yn Saesneg. Rhan o hynny ydy dylem ni i gyd fod yn gallu gwybod ar unrhyw adeg beth yw'n sefyllfa ni dan y gyfraith, fel ein bod ni'n gallu sicrhau ein bod ni'n gweithredu mewn ffordd gyfreithlon. Felly, rydyn ni'n gallu gwybod os ydyn ni'n gwneud hyn a hyn, mae hwnna'n drosedd rwyt ti'n gallu cael dy gosbi amdano fo. Os ydych chi'n gallu newid y gyfraith mewn ffordd ôl-weithredol, mewn ffordd ôl-syllol, yna mae modd ichi newid y sefyllfa fel bod rhywbeth a ddigwyddodd echdoe, a dweud y gwir, yn drosedd a bod rhywbeth a wnes i neu a wnaethoch chi yn gwbl gyfreithlon yn gallu cael ei newid yn drosedd ac wedyn eich bod chi'n mynd i garchar. Wel, rydyn ni'n gallu gweld, y math yna o ymddygiad, ymddygiad teyrn ydy hynny, ymddygiad gorthrymus ydy hynny.

Ym maes trethiannu, mae modd edrych ar hynny mewn ffordd ychydig yn wahanol, ond yr un egwyddor sydd ar waith. Os ydw i heddiw yn gallu trefnu fy materion treth fel fy mod i'n mynd i dalu llai o dreth, er enghraifft, os ydw i'n gwybod os ydw i'n rhoi £100 i elusen y byddaf i'n cael rhywfaint o fudd treth yn ôl am hynny, ond wythnos nesaf mae'r Llywodraeth yn medru newid y gyfraith drwy ddweud, 'Chei di ddim gwneud hynna dim mwy, a beth sy'n fwy, rydyn ni'n mynd i newid y gyfraith yn y gorffennol fel nad oeddet ti ddim yn gallu gwneud hynny bryd hynny', yn sydyn, o fod wedi arbed treth, a dweud y gwir, dydw i ddim wedi arbed treth er fy mod i wedi gweithredu mewn ewyllys da yn gwneud beth wnes i ar y pryd.

Felly, mae hynny o ran egwyddor yn beth dydy'r gyfraith ddim yn ei hoffi. Dydw i ddim yn dweud ei fod o'n amhosibl. Mae'n gallu digwydd ac mae wedi digwydd, ond pan mae o'n digwydd, mae yna amodau reit eglur wrth y peth. Yn y lle cyntaf, mae'r bwriad i wneud hyn yn cael ei gyhoeddi'n eglur ar lawr y Senedd yn San Steffan, felly mi fyddai trethdalwyr sydd yn mynd ymlaen i geisio osgoi treth yn gwybod eu bod nhw'n gwneud hynny ar eu risg eu hunain. A'r ail beth yw bod hyn yn tueddu i ddigwydd drwy ddeddfwriaeth gynradd yn hytrach na chyfraith eilaidd.

Mae yna broblemau eraill efo deddfwriaeth ôl-syllol, ôl-weithredol sydd yn arbennig o broblemus i Senedd Cymru a Gweinidogion Cymru, sef bod perygl o dorri ar draws hawliau dynol—yr hawliau dynol hynny sy'n ymwneud â diogelu eiddo, erthygl 1, protocol 1 y confensiwn, a rhai hawliau eraill hefyd. Mae'n llai o broblem yn dechnegol i ddeddfwrfa San Steffan, ond mae yn broblem hefyd. Yn gyffredinol, mae o'n lle anghysurus iawn, iawn i ddeddfwrfa fod i fod yn cynyddu'r baich ar y bobl mewn ffordd ôl-syllol. A dwi'n rhyw amau, heb fod y math yma o negesu eglur wedi digwydd gan y Llywodraeth yn dweud, 'Byddwn ni'n deddfu yn y dyfodol; o heddiw ymlaen, byddwch chi ddim yn cael gwneud hyn', fod yna berygl go iawn, pe bai'r pŵer yma'n cael ei ddefnyddio gan Lywodraeth Cymru, y byddai'r sefyllfa'n gallu cael ei hadolygu gan y llysoedd mewn ffordd eithaf—. Yn y llysoedd y byddwch chi, te—rhowch o fel yna, dwi'n credu.

Sorry, I heard a noise there. And on the other hand, without there being a major loss to Welsh coffers because of unexpected changes in the tax system in London. I think in those two cases there is a valid argument for saying that the powers should be exercised, if it is right to give those powers in the first place, in a retrospective manner and a retroactive manner, and I've explained why in my evidence.

Where I am more concerned is in the context of these very wide-ranging powers that we mentioned, and particularly even though these powers can't be used to impose an additional punishment on taxpayers, they can be used to levy greater taxes on people so that they are liable for taxes where they wouldn't have been. This is contrary to the principle under the law that is recognised as 'the rule of law'. And part of that is that we should all know at any one time what our situation is under the law to ensure that we do operate in a legal way, so that we should know that if we do this, that and the other, then that is a crime that you could be punished for. If you can change the law in a retrospective or retroactive way, then you can alter the situation so that something that happened the day before yesterday becomes an offence, and something that I did or that you did entirely legally could be turned into an offence and then you could be jailed. So, as we can see, that kind of conduct is the action of a tyrant; it is oppressive conduct.

In terms of taxation, you can look at that in a slightly different way, but it's the same principle. If I today can arrange my tax affairs so that I pay less tax, for example, if I know that if I give £100 to a charity then I will receive some tax benefits back from that, but next week the Government can change the law by saying, 'Well, you can't do that any more, and what's more, we'll change the law retrospectively in the past so that you couldn't have done it then either', suddenly, from having saved tax, I haven't saved tax at all even though I had acted in good faith in doing what I did at that time.

So, that, as a principle, is something the law doesn't favour. I'm not saying that it's impossible. It can happen and it has happened, but when it happens, there are clear conditions attached to the change. In the first instance, the intention to do this is announced clearly on the floor of Parliament in Westminster, so that a taxpayer who would go on to try to avoid tax would know that they were doing that at their own risk. And the second is that this tends to happen through primary legislation rather than secondary legislation.

There are other problems associated with retrospective, retroactive legislation that are particularly problematic for the Senedd and the Welsh Ministers, namely the risk of contravening human rights—those human rights related to property rights, article 1, protocol 1 of the convention, and some other rights too. It's less of a problem technically for the Westminster legislature, but it is a problem there too. In general, it is a very, very uncomfortable position for a legislature to be in to be increasing the burden on people in a retrospective manner. And I suspect, without there being this kind of clear messaging from the Government to say, 'We will legislate in future; from today on, you won't be able to do this, that or the other', that there is a genuine risk that if this power were to be used by the Welsh Government, that the situation could be reviewed by the courts in quite a—. Or, put it this way, I think: you would be going to court.

11:15

Diolch yn fawr. Mae hwnna'n gynhwysfawr iawn. Mae gan Peter un neu ddau gwestiwn arall, dwi'n meddwl, ac wedyn fe wnawn ni symud ymlaen. Dwi'n edrych ar y cloc hefyd a byddwn i'n gofyn a fyddem ni'n gallu mynd drosodd rhyw bum munud jest er mwyn gallu cwblhau, gan obeithio eich bod chi'n hapus gyda hynny. Byddai hynny'n grêt, diolch. Peter.

Thank you very much. That's a very comprehensive response. Peter has one or two other questions before moving on, I believe. I'm looking at the clock too. Could we go over five minutes or so just to finish our questions? I'm hoping that witnesses are content to stay five minutes extra. That would be great, thank you. Peter.

Thanks for that. I suppose that's some—. What could be written in to protect the public from that? What safeguards could be written in? I don't know. I don't know if there are some obvious things that either of you might want to suggest could be put in. If retrospectiveness has to stay in the Bill, how can we protect our citizens?

Dwi'n argymell yn fy mhapur fod yr hyn sydd yn mynd i gael ei ddefnyddio drwy'r datganiad polisi, a dweud y gwir, yn cael ei roi ar wyneb y Ddeddf, er enghraifft, y math o sefyllfa lle na ellir mynd yn ôl mewn amser cyn datganiad ar lawr y Senedd ynglŷn â'r bwriad i ddeddfu.

I recommend in my paper that what is going to be used through the policy statement is placed on the face of the Bill and the Act, for example, the kind of situation where you can't go back in time prior to a statement on the floor of the Senedd with regard to the intention to legislate.

Okey-doke. I'll push on. I've got a couple more questions. Evidence submitted mentioned the Bill should include provisions requiring Welsh Ministers to give advance notice to stakeholders about proposed changes in advance to retrospective changes. Do you agree with this, and would it address your concerns regarding powers to make retrospective changes? 

Ydw, dyna dwi wedi ei argymell. Byddwn i yn cytuno efo hynny, ond na, dydy o ddim yn cael gwared â fy mhryder i. Dwi'n credu y dylai unrhyw ddeddfwriaeth ôl-syllol, ac eithrio yn y categori cyntaf o gydymffurfio â chyfraith ryngwladol gael ei gwneud, neu o leiaf ei chymeradwyo, ar lawr y Senedd.

Yes, that's what I have recommended. I would agree with that, but it doesn't eradicate my concern. I think that any retrospective legislation, with the exception of the first category of complying with international law, should be made, or at least approved, on the floor of Senedd.

11:20

I endorse that. I can't say that I've done a comprehensive survey of this, but it seems, from what I can gather, that there is no example at Westminster of retrospective secondary legislation. So, this would be a first for the Senedd, but not a first that I think the Senedd should be particularly proud of.

That's really helpful. Thank you for that. My last question, probably to you first, Emyr, because it's in your evidence: in your evidence you felt that the use of the power to legislate retrospectively in the case of decisions made by the court or tribunals represents serious potential challenges to the rule of law. Could you explain your concerns regarding the potential use of the proposed power, and how the Bill may be amended to address them? I apologise if you've already answered that several times.

Wel, dim ond i raddau. Fe wna i ymhelaethu ar beth roeddwn i'n ei ddweud o ran newid y gyfraith yn y gorffennol. Dychmygwch y sefyllfa yma: mae achos llys yn digwydd lle mae'r llys yn penderfynu bod ddim arno'r trethdalwr dreth, a dydy Llywodraeth Cymru ddim yn licio penderfyniad yr achos llys, felly maen nhw'n newid y penderfyniad ac maen nhw'n ei wneud o'n ôl-weithredol cyn dyddiad yr achos llys. Dydw i ddim yn credu y byddai hynny, am funud, yn pasio llys barn; dwi'n credu y byddai hynny'n cael ei weld fel defnydd amhriodol o'r pŵer gan Weinidogion Cymru. Ond yn hytrach na'i gadael hi i siawns, dwi'n credu y dylai fod, os ydym ni'n mynd i fod â'r pethau ôl-weithredol yma o gwbl, ffin bendant yn cael ei gosod o'r datganiad wedi'i wneud—yr advance notice roeddech chi'n sôn amdano fo—fel y dyddiad cyntaf y gellir deddfu oddi wrtho. A gyda llaw, dwi ddim yn credu mai advance notice to stakeholders ddylai hwn fod, achos, fel dywedodd Paul, mae stakeholders yn gyfyng—dylai hwn fod yn ddatganiad cyhoeddus ar lawr y Senedd.

Well, only to an extent. I'll elaborate on what I've said about changing the law retrospectively. Imagine this situation: a court case takes place where the court decides that the taxpayer doesn't owe tax, and then the Welsh Government doesn't like that decision, so they change the decision and they apply it retrospectively before the date of the court case. I don't believe that that, for one moment, would pass in a court of law—I think that would be seen as an inappropriate use of the retrospective power by Welsh Ministers. But rather than leaving it up to chance in that way, if we're going to have these retrospective actions at all, I think that a very definite boundary should be set of the statement made—this advance notice that you talked about—as the first date upon which legislation could apply from. And I don't think that this should be an advance notice to stakeholders, because, as Paul said, stakeholders are a limited group—this should be a public statement on the floor of the Senedd. 

Diolch yn fawr. Mi wnawn ni symud ymlaen at Mike. Mae o wedi bod yn disgwyl yn eiddgar yn y fan yna. Diolch, Peter, a diolch am yr atebion. Mi wnawn ni fynd drosodd i Mike.

Thanks you very much. We'll move on. Mike has been waiting very patiently there. So, thank you, Peter. Over to Mike.

Can I start by saying it's very nice to see you again, Paul? I very much appreciate the work you did on the two commissions that bear your name. The first question I've got is: we've talked about a statement of policy to make regulations that have retrospective effect—we've talked about that a lot—but should the Senedd have a statutory role in approving the statement and any future changes made to it that the Welsh Government may propose? 

I think adding that in would be useful, yes, if the statement is formally approved by Members, possibly with the ability for them to amend it. That would be beneficial, yes. 

I can see the Government's problem with tax. They haven't got corporation tax, thankfully, or not thankfully depending on your viewpoint, because that's become a voluntary contribution by multinational companies, where they pay as much or as little as they decide and organise their profits in different countries. We don't want to see that happening with other taxes, do we?

I think silence is acquiescence there. I think we're in agreement there, Mike.

My next question is: what are your views on the use of the draft and made affirmative procedures to approve regulations in the context of this Bill, and how effective are these in allowing stakeholders, the Senedd and the people of Wales to conduct proper scrutiny?

If I can kick off, perhaps, on this one. The made affirmative procedure, as I think I say in my written evidence, is, historically, very, very unusual. It's something that has come along, really, since the coronavirus epidemic. I was looking at something the Scottish Parliament has produced about this. Apparently, there were only a couple of these made in Scotland until coronavirus, and now there have been over 100 made. I guess the same is true in London and is true in Cardiff. I just so happens I was looking at some figures from Scotland.

Made affirmatives in the public health emergency made sense. I'd be very cautious about made affirmatives, because, by definition, they're made before they're approved by elected Members. When there is an absolute emergency, as there clearly was during coronavirus, then there is a justification for them. But the justification needs to be made in each case, and allowing this in these circumstances, I hope that Members will at least put the Welsh Government through the machine a little bit to see whether they really can justify the inclusion of made affirmative procedures in this Bill. 

11:25

Thank you for that. I can think of other things. Income tax only came in for a short time to fund one war under Pitt the Younger, but it seems to have lasted slightly longer; we've had Henry VIII powers, which I hadn't heard of five years ago, being mentioned regularly. Are there dangers that we're moving in a direction where control is moving to a small number of people without the opportunity for the rest of us, either in the legislature or the public, to actually be able to challenge and argue against it?

One doesn't want to exaggerate these things, but I think that there has been a historical trend towards giving more powers, including legislative powers, to the Executive, and by definition removing them from the legislature. There were two reports that I cite in my written evidence from committees in the Westminster Parliament about this, and the constitution committee in the Senedd has reported about it, so I think it is a concern that many people who love parliaments have, to see the powers of parliamentary control eroded. This Bill is an example of that. It's not a particularly egregious example of that, except in its provisions about retrospectivity. 

I'd like to ask a question to Professor Emyr Lewis. Your recommendation is that consideration could be given to a provisional resolution mechanism as an alternative, or in conjunction with, the use of secondary legislation. I've had to read that out because I don't really understand what that means and how it would work. Could you put it relatively simply? How would it work and how would it be better?

Wrth gwrs. Yn Senedd San Steffan yn Llundain, os ydy'r Canghellor yn datgan ei fod e am newid y dreth yn ei gyllideb, mae'n dweud, 'Mi fyddwn ni'n dod â deddfwriaeth gynradd gerbron er mwyn newid y dreth'. Y ddeddfwriaeth honno yw'r Bil Cyllid. Er mwyn galluogi'r newidiadau hynny i ddigwydd yn syth, mae modd, dan y Provisional Collection of Taxes Act 1968, i'r Senedd yn Llundain bleidleisio—ways and means motion maen nhw'n ei alw fe—i alluogi'r newidiadau i ddigwydd yn syth. Dyna beth dwi'n ei olygu.

Of course. In the Westminster Parliament in London, if the Chancellor declares that he wants to change the taxation in his budget, he says, 'We will bring forward primary legislation in order to change the tax'. That legislation is the Finance Bill. In order to enable those changes to happen immediately, under the Provisional Collection of Taxes Act 1968, the Westminster Parliament can vote through a ways and means motion—that's what they call it—to enable those changes to happen immediately. That's what I mean.

Thank you very much for that. It does make it a lot clearer to me how that would work—

Sori, Mike, ond os caf i, fyddai'r Ddeddf yna yn gallu cael ei defnyddio, a'r dull yna yn gallu cael ei ddefnyddio, yn y Senedd o dan beth sydd gennym ni yn barod?

Sorry, Mike, but if I may, would that legislation or that method be able to be used in the Senedd under the system that we currently have?

Byddai'n rhaid, dwi'n credu, deddfu i alluogi hynny i ddigwydd, a byddai angen diwygio'r Rheolau Sefydlog. Ond mewn egwyddor, does dim rheswm pam na ddylai hynny ddigwydd, gyda chydlynu pwrpasol rhwng y ddwy Lywodraeth yn Llundain ac yng Nghaerdydd, a'r ddwy ddeddfwrfa. Efallai bod hynny'n gofyn gormod, wn i ddim. Ond, gyda chydlynu pwrpasol, mi fyddai modd wedyn goresgyn y broblem o Rishi Sunak yn gwneud newid a dydyn ni ddim yn gwybod beth rydyn ni'n ei wneud, felly.

I think you would have to legislate to enable that to happen, and Standing Orders would need to be amended. But in principle, there's no reason why that couldn't happen, with purposeful alignment between Governments in London and Cardiff, and the two legislatures. Perhaps that's asking too much, I don't know. But, if you had that purposeful alignment, you could overcome that problem of Rishi Sunak making a change and we don't know what we're doing here as a result.  

11:30

If I may just interject here, I'm not sure whether the provisional collection of taxes method would need the approval of the Westminster legislature, if that were to be introduced in Wales. 

My last but one question is: do you have concerns that legislating in haste may lead to unexpected complexities and could end up with unintended consequences? I think the Dangerous Dogs Act 1991 is an example of that—nothing to do with finance, but it was something that everybody supported until they realised that it didn't actually deal with the problem. 

Yn gyfan gwbl.

Absolutely. 

Thank you. Finally, what would you consider to be the best approach to reviewing the operation and effect of this legislation if it is passed by the Senedd? And what happens if it isn't?

If this legislation isn't passed by the Senedd, the problem will not go away, and I guess that the Welsh Government would wish to take a different route to remedy it, which might be the route that your committee would prefer, which is the use of emergency primary legislation to deal with issues as they came along. So, it wouldn't have this power, this set of ammunition, as it were, in its backpack, but it would have to legislate in each case. 

The judgment that you as a committee and then the Senedd as a whole has to form is whether you want to give that ammunition to the Welsh Government—you think that the problems are potentially so great and so urgent that the Executive should have these powers—or whether you want to reserve the powers to yourselves as the legislature. I think the tenor of the evidence that Emyr and I are giving is that perhaps you should think carefully before you give away these powers, or at least in all of the circumstances in which the Welsh Government want them to be given to them. 

If I may come in on a question that I asked of other witnesses and others, is this legislation necessary and, if it isn't, what are the alternatives? I think you've covered a little bit of that, but do you think that this is actually necessary?

Dwi'n meddwl bod angen deddfwriaeth er mwyn galluogi newidiadau cyflym i ddigwydd. Dwi'n credu bod y syniad o roi'r grym i ddiwygio er mwyn cyd-fynd â dyletswyddau rhyngwladol yn un da, oherwydd mae'n rhywbeth sy'n debyg i bwerau eraill er mwyn diwygio deddfwriaeth gynradd er mwyn gwneud y ddeddfwriaeth honno'n gyfreithlon. Mae angen rhywbeth, dwi'n credu, i ddelio â'r broblem sy'n deillio o sut mae Cymru'n cael ei hariannu, sut mae'r fformiwla yn y cytundeb rhwng Llywodraethau yn tynnu arian i ffwrdd oddi wrth Gymru os oes newidiadau treth yn digwydd yn Lloegr er mwyn ein bod ni'n gallu cadw i fyny gyda Lloegr. Dwi'n credu bod hynny yn rhywbeth sydd angen ei galluogi i'w wneud yn sydyn, ond dwi'n credu efallai y dylem ni fod yn edrych ar y ways and means o'i wneud o.

Ar y ddau beth arall, dydw i ddim yn argyhoeddedig bod y rheini'n angenrheidiol, oni bai ein bod ni'n gallu gweld sefyllfaoedd lle mae yna fygythiad sydyn a sylweddol iawn i goffrau Cymru oherwydd canlyniad rhyw achos llys neu ryw fath arbennig o osgoi treth. Dydw i ddim yn gallu gweld bod yna gyfiawnhad dros roi'r pŵer yma i Lywodraeth Cymru, ac mi fyddai'n well gen i weld sefyllfa lle mae gennym ni ddatganiad yn cael ei wneud ar lawr y Senedd, a deddfwriaeth gynradd yn cael ei chyflwyno yn y man sy'n ôl-weithredol i ddyddiad y datganiad hwnnw, sef y ffordd mae o'n digwydd, yn sicr, yn Senedd Llundain.

I think that legislation is needed to enable swift changes to be made. I think that the idea of giving the power to amend to coincide with international duties is a good one, because it is similar to other powers to amend primary legislation, to make that legislation lawful. I think there is a need for action to deal with the problem that stems from the way that Wales is funded and how the formula in the inter-governmental agreement draws funding away from Wales if there are tax changes made in England, in order to keep up with anything that happens in England. I think that we do need to do that swiftly, but I think we should be looking at the ways and means of doing it. 

On the two other matters, I don't believe that they are vital, unless we can see situations arising where there was a rapid threat and a significant threat to Welsh coffers because of the result of some kind of court case or a particular case of tax avoidance. I can't see that there is a justification for giving these powers to the Welsh Government, and I would prefer to see a situation arising where we have a statement being made on the floor of the Senedd, and primary legislation being introduced in due course that is retrospective to the date of that statement being made, which is the way that it happens, as far as I'm aware, in the Westminster Parliament. 

11:35

I agree with that, yes. 

Lovely. There we are. Thank you very much. 

Diolch yn fawr iawn i chi am eich amser bore yma. Rydyn ni wedi mynd dros amser ychydig bach ond roedd e'n werth o er mwyn cael eich tystiolaeth chi, ac mae wedi bod yn hynod o ddifyr i wrando arnoch chi yn ateb ein cwestiynau ni ac yn ymateb yn ddidwyll iawn, ac yn ateb yn glir ac yn gryno efo lot o waith i ni rŵan i'w wneud ac edrych, ac i ystyried bob dim rydyn ni wedi'i glywed ac i ddod i argymhellion ynglŷn â hyn. Felly, dwi'n hynod o ddiolchgar i chi am eich amser y bore yma. Felly, yn ôl—

Thank you very much to you both for your time this morning. We've gone a little bit over time but it was worth it in order to receive your evidence, and it's been very interesting to listen to your responses to our questions and for responding in such a comprehensive and clear way. And we've got a great deal to mull over now as we consider everything that we have heard this morning as we formulate our recommendations on this issue. So, I'm very grateful to you for your time this morning. So—

Diolch, Chair.

Thank you, Chair.

Diolch am y gwahoddiad.

Thank you for the invitation. 

4. Cynnig o dan Reol Sefydlog 17.42(ix) i benderfynu gwahardd y cyhoedd o weddill y cyfarfod.
4. Motion under Standing Order 17.42 (ix) to resolve to exclude the public from the remainder of this meeting.

Cynnig:

bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod yn unol â Rheol Sefydlog 17.42(ix).

Motion:

that the committee resolves to exclude the public from the remainder of the meeting in accordance with Standing Order 17.42(ix).

Cynigiwyd y cynnig.

Motion moved.

Felly, yn ôl Rheol Sefydlog 17.42, dwi'n cynnig bod y pwyllgor rŵan yn gwahardd y cyhoedd o weddill y cyfarfod yma. Ydy'r Aelodau yn gytûn? Ydyn, dwi'n meddwl. Dwi'n gweld dim anghytuno. Awn ni felly i mewn i breifat mewn 10 eiliad, felly. 

So, under Standing Order 17.42, I now propose that the committee excludes the public from the remainder of this meeting. Do Members agree? I see that Members are in agreement, so we will go into private session in 10 seconds or so. 

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 11:36.

Motion agreed.

The public part of the meeting ended at 11:36.