Cynulliad Cenedlaethol Cymru

Okay, may I welcome everyone, then, to this first meeting of the autumn term of the Local Government and Housing Committee? The meeting is being held in hybrid format, but aside from the adaptations relating to conducting proceedings in hybrid format, all other Standing Order requirements remain in place. The public items of this meeting are being broadcast live on Senedd.tv, and a Record of Proceedings will be published as usual. The meeting is bilingual and simultaneous translation is available. Are there any declarations of interest? No.

Then we will move on to item 2, which is a ministerial scrutiny session with the Minister for Climate Change, Julie James. So, may I welcome the Minister to this meeting? And also the Minister's officials: Emma Williams, who's director of housing and regeneration; Amelia John, who's deputy director of housing policy; Tanya Wigfall, who's head of the residential decarbonisation programme; and Simon White, head of housing legislation. Hopefully we'll be joined in due course by Jo Larner, who is head of the building safety programme. So, thank you all very much for joining the committee today.

Minister, perhaps I might begin with some initial questions on homelessness, which obviously is such an important issue for us, and firstly, your views on the current pressures that homelessness services are facing in Wales, and particularly with regard to the cost-of-living pressures, and what that might mean as we move forward, and also whether Welsh Government is considering any further steps to deal with homelessness for this coming winter.

Bore da, Cadeirydd; good morning, everyone. I apologise to start off with, John, I seem to be full of cold, so I'm coughing rather a lot. So, apologies in advance for that. 

It's that time of year, I'm afraid, isn't it?

It is indeed, yes, and it's not COVID—I'm very negative—but other viruses are available, it transpires. But, anyway.

So, yes, we have a very significant homelessness pressure across Wales. New presentations are really continuing at a very worryingly high rate, and they are definitely driven, in addition to everything else, by the cost-of-living crisis. As of May this year, we had 8,134 people in temporary accommodation in Wales, and we have got around 1,000 people a month approaching homelessness services across Wales because they are experiencing homelessness or are in imminent danger of homelessness. So, we've listened and responded to pressures in the system across the piece. We have a close working relationship with our local authority colleagues to make sure that we're on board with where they are.

Earlier this year, I provided an extra £6 million to local authorities for the discretionary homelessness prevention fund, which gives them maximum flexibility to use the fund to prevent homelessness, because, obviously, it's a lot better if we can prevent homelessness in the first place than it is to deal with people who have become homeless. We have put a lot of effort into trying to get upstream to make sure that people can, where at all possible, stay in their own homes. It can be used for both social and private tenants, and it includes, for example, providing bonds or rents in advance or clearing rent arrears, and it provides items of furniture and other things that make it possible to stay in your home.

There are a number of other funding arrangements that we have in place as well. We've provided an additional £65 million for a transitional capital accommodation programme to rapidly increase the supply of more permanent homes across Wales, and to accelerate, where possible, our social home building programme. We've invested considerably in that area already; our budget for 2022-23 has over £197 million of investment in homeless prevention and housing support, and a record £310 million in the social housing budget. That includes all the social support grants, which are the main homelessness prevention grants provided to local authorities. We increased that funding last year, 2021-22, by £40 million, which is a 30 per cent increase, and we've maintained that increase this year. It also includes an additional £10 million to local authorities for temporary accommodation costs, as we move towards our rapid rehousing approach. 

And then, lastly, just to mention, John—I'm sure you'll have other questions on this—you'll have noticed that the First Minister's statement last week on the cost of living and the actions that we're taking as a Government included a further £15 million for the discretionary assistance fund, which ensured that flexibility was introduced during the pandemic, which enabled more people experiencing severe financial difficulties to access that help; it will continue until March next year. That's in addition to the fund budget uplift of £7 million over the next three years that we'd already announced. Then, there's the £90 million in the Welsh Government fuel support scheme, which supports people on low incomes with non-repayable £200 payments for energy, and a £150 cost-of-living payment is available for all houses in properties in council tax bands A to D, or anyone who receives the council tax reduction scheme support.

And then, we're running a big campaign, myself and Jane Hutt, in conjunction with our officials for a 'Claim what's yours' campaign, which highlights making sure that people who are entitled to these additional supports know about them, and can claim them. We've provided £300,000 to Citizens Advice Cymru. And then, I'm sure, John, you'll come on to it separately, but, of course, we're introducing the Renting Homes (Wales) Act 2016, which will provide additional security of tenure to people in the private rented sector as well. The whole aim of this is to keep people in their homes where at all possible.

Thanks for that, Minister. Clearly, there's a substantial Welsh Government effort taking place with programmes and funding that go beyond your ministerial responsibilities, and it's all highly relevant. We will come on to renting homes later. Minister, you mentioned that it's around 1,000 people a month who are presenting with homelessness issues at the moment. How does that compare with numbers historically over recent years? Is that a very marked increase?

Yes, it's higher than it was before the pandemic. It's about the same as it was during the pandemic, and it hasn't—. Actually, I'm just being told by one of my officials that it's up to 1,300 a month at the moment—

Thirteen hundred. 

—so even worse than it was earlier this year. Those figures were commonplace in the pandemic, but they're quite a lot higher than they were before. 

Yes, I see. So, in the light of that, Minister, despite all that you've said in terms of Government funding and programmes, it's obviously going to be a very difficult time over the winter and beyond in terms of homelessness. You mentioned temporary accommodation and some of the help that's being given from Welsh Government with regard to that. That additional funding for transitional accommodation, announced over the summer, Minister, could you expand a little bit on what impact you think that's likely to have? We know that there are so many people in temporary accommodation now, and it includes the necessary support for refugees as well. What would you expect to result from that additional funding?

The very short answer to that is that we anticipate up to around 650 additional properties in this financial year as a result of the additional funding, on top of the build we were expecting. What we're basically trying to do is significantly increase the medium and long-term accommodation offer that we have across Wales, in response to this and in response to the refugee crisis, which of course is on top of the homelessness problem we already had. We're also trying to build capacity for the longer term, by providing specific funding to local authorities to fund strategic co-ordination roles on the transformation agenda—so, shifting our whole system towards a rapid rehousing approach, away from priority need, and to ensure strategic join-up across the various parts of the authority. So, it's to make sure that the homelessness or housing options services are not somehow separated off from the rest of the authority, and we've had some success in doing that.

Obviously, we've upped the budgets considerably. Our final budget for 2022-23 was over £197 million of investment in homelessness prevention and housing support, and this £310 million record investment in social housing. So, obviously, we're trying to attack it from both ends. We're trying to make sure that our preventative services, our housing support services, and our rent support services are in place, that we work with our local authorities to make sure that they have joined-up plans to keep people in their homes, and then, where people do fall into homelessness, that we increase our supply of housing as fast as we can, and we move to this rapid rehousing approach that we've discussed with this committee a number of times.

Okay. Minister, just with regard to your working with local authorities, and indeed all the other agencies that are helping deal with the homelessness challenge, with 1,300 people presenting with potential homelessness, at least, every month, will you be meeting very regularly with local authorities and others to monitor the situation? And is there a further possibility of Welsh Government assistance if matters get to the stage where that's necessary, as a result of the monitoring that takes place?

So, we do meet very regularly with the housing cabinet members from across local government. We also meet regularly with registered social landlord providers and Community Housing Cymru. We also meet very regularly with the leaders of the local authorities. So, my colleague Rebecca Evans, the Minister for local government, has a very regular fortnightly meeting with them, and housing is very frequently on the agenda for that as well, alongside the Ukrainian refugee, and wider refugee, crisis. So, we work very, very closely with our local authorities. We have specific officials working as relationship managers with each local authority. So, they have a very specific named official who works with them to make sure that we're on top of individual specific issues going on in local authorities. And we have a whole culture change system approach going on.

We are incredibly proud of the way that Wales responded during the pandemic. We've still got an everyone-in approach, which is not the case across our border, unfortunately. And so, we're very determined to stay on target for that. I'm sure, Chair, you're going to come on to the way that we're transforming homelessness legislation here in Wales. But we're very, very determined to keep our approach going, despite the fact that we have such pressures in the system. And of course, the pressures are exacerbated very severely by the wider economic shock that the country is currently experiencing. Because we know that families that are under economic pressure experience much more in terms of family breakdown, relationship breakdown, which drives the kinds of homelessness that we see.

Yes, absolutely. In terms of legislation then, Minister, I wonder if you could firstly expand on the proposals for transitional homelessness regulations and the reasons for bringing those regulations forward before the more fundamental change that we're going to see in terms of legislation.

Yes, certainly. So, as the committee will remember very well, I'm sure, our 'no-one left out' approach took place almost overnight when the pandemic hit, as opposed to the years of transition that we had originally thought we would have when our homelessness action plan was presented to us. We were very lucky; the serendipity of having had that plan presented to us just in front of the pandemic meant that we had a plan to respond to. I'm sure the committee will remember that that homelessness team is chaired by Crisis, and the new chief exec of Crisis has continued in that role going forward. And we were able to do that very rapidly using the COVID regulations. But, obviously the pandemic regulation regime has come to an end, and now we have a gap between the end of that and where we need to be to have the fundamental primary legislation reform that we need to do. We have a lot of work to do to get there.24

The radical changes we've seen during the pandemic mean that we want to stay where we are; we don't want to go back to the old regime and take a step back before we take a step forward. I'm sure this isn't how my officials will describe it, but, basically, we're putting a sticking plaster on the system to make sure that the current system allows us to have that approach while we work on completely changing the homelessness legislation. We'll be putting a Green Paper out in 2023 to trail what we're actually going to do in terms of changing the entire system in Wales to a rapid rehousing system properly in the primary legislation. 

Thank you for that. What impact would you expect from adding rough sleepers to the categories of priority need, and why is that seen as necessary given the ongoing 'no-one left out' approach?

Because the ongoing 'no-one left out' approach isn't supported by the current legislation regime, and so what we're doing is basically adding everyone to the categories that get support as a temporary stop gap. So, it won't have any effect, John, because it's what we're already doing. We're just making sure that the authorities have the legal backup for that while we work on the fundamental changes to the regulations. I'm sure various officials in the team can take you through the detail of that if the committee would like that. 

That's fine, thank you, Minister. Finally from me then on homelessness, you mentioned Crisis and the role that they've played, and the expert panel has obviously been very influential—rightly so, I would say. Could you tell the committee how the homelessness Green Paper, which I think is expected next year, will relate to the expert panel and, indeed, Crisis?

Yes, certainly. We're very fortunate in that Crisis are continuing to support our panel. The expert review panel is chaired by Professor Suzanne Fitzpatrick. They're developing the proposals and advice for the Welsh Government, and they're completely in line with our action plan, which they developed in harmony right across our system. We want to ensure that our laws in Wales prevent homelessness and, where homelessness is experienced, provide access to rapid rehousing or help for housing, whichever is needed the most. It will include a consideration of priority need and intentionality as it's called, and it will achieve a transformational shift to rapid rehousing, which provides that long-term solution for everyone in acute housing need. The panel has representatives from all key sectors across Wales, as it always has—partners from local government, housing associations, third sector homelessness and equality organisations, and experts from academic and legal fields. I'm really keen to have lived experience voices on the panel as well. So, we're requiring the panel to ensure that the lived experience of people who have experienced homelessness in Wales is reflected in its work.

We will publish the Green Paper in spring next year. It sets out that longer-term policy and legislative mechanisms needed to support the change ahead of introducing the legislation later in this Senedd term. The paper will reflect the themes set out by the expert panel and provide additional broad context into the proposed reforms for consideration alongside the panel report. I'm really looking forward to receiving their final report. We'll be keeping in close touch with the panel as they do their work. I've had a meeting with the new chief exec of Crisis already; we have a shared ambition to end homelessness in Wales across all sectors, I'm pleased to say. This will be a really substantial and complex Bill, which I'm sure the committee will be keen to help us shape. It will reshape the whole legislative policy framework in Wales to make sure that homelessness is rare, brief and unrepeated.

Thank you very much. We'll move on to Carolyn Thomas. 

Good morning. I hope you'll be feeling better soon, Minister. I was wondering if you could tell me about the challenges you're now facing regarding the target of building 20,000 low-carbon homes with the current economic situation at the moment, and perhaps an update on the development of Unnos, the construction company.

Certainly, Carolyn. The fundamental here is that we all agree that a good-quality, secure home is fundamental to social, physical and mental well-being, and the escalating cost of living emphasises that the case for investing in social housing is as strong as it has ever been. There are clearly challenges affecting the whole house building industry, but we remain committed to our really stretching target of 20,000 low-carbon homes for rent, as set out in our programme for government. As I’ve already mentioned, we’ve allocated record levels of funding to the social housing grant. We doubled the budget to £250 million in 2021-22 and we've further increased this to £300 million this year. We've set indicative draft budget allocations of £330 million in 2023-24, and £325 million in 2024-25. The challenges, as I'm sure the committee is well aware, include the increasing cost of building materials, delays in delivery, challenges in relation to phosphates, delays in the sustainable drainage systems approvals and planning approvals processes. We're working really closely with the sector, planning authorities and the housing sector to overcome these challenges, and we continue to do that.

In terms of increases in material costs, we've provided additional capital during 2021-22 to support the delivery of affordable housing schemes, and we continue to review the need for additional funding this year. The phosphorus pollution in Wales, which I'm sure the committee is well aware of, and the problems with our special areas of conservation rivers—SAC rivers as they’re called—is a serious issue that is preventing some affordable housing development, but there aren't any real easy solutions to that. I’m sure that the committee is aware that the First Minister held a river pollution summit at the Royal Welsh Show in July, which was a very positive meeting. All attendees recognised the challenge and committed to work together to explore actions in their own sectors rather than blaming each other for the problem. Those task-and-finish groups are going ahead. We've also established nutrient management boards for each of our SAC rivers, to work very hard on how we can get those rivers back into good conservation status.

We're also working very hard with our planning colleagues to facilitate the delivery of social homes. We want to take action to increase the certainty in the planning system through committing to a plan-led planning system that provides a rational framework for taking those planning decisions. We've amended 'Planning Policy Wales' to include a requirement for all local planning authorities to make provision for affordable housing-led sites containing at least 50 per cent affordable housing. I've instructed a post-implementation review of the SuDS regime—that's the sustainable drainage regime—with the first findings due in November of that. The final report focusing on solutions to all of the issues that have been raised with us by the various small and medium-sized enterprises and the construction industry will be provided to us in March of next year.

It was raised with me by a local authority that it can take eight months for a response from statutory consultees, which can hold up the house building process as well, and I think they're struggling to find match funding. Could you give an update on the development of Unnos, the construction company, which is part of the co-operation agreement? Thank you.

Sure, Carolyn, I certainly can. Just to go back to the delays in the planning system, that's very much what we've been looking to work with, and we've also been working with the water companies, Dŵr Cymru in particular, about slow responses to requests for connection for SuDS and sprinkler systems and so on. So, just to assure you that, as part of the construction forum and as part of the forums that we hold with local authority leaders, housing leads and planning leads, we are working on making sure that we can speed that system up as much as we possibly can.

You'll, I'm sure, be aware that most of the local authorities in Wales are now in the process of reviewing their local development plan. Only a few of them have completed that process. Over the next year they'll all go through that process, and we expect them to address the issue of land supply and priority for social housing as part of that process. So, we do hope that system will speed up as a result of the various interventions.

And then turning to Unnos, the designated Member, who is Siân Gwenllian, and myself only yesterday had another conversation about implementing a progressive solution for Unnos. It will not be competing with any SME building firms to deliver social homes. We're talking about a new company. It will not be in direct competition with the private sector; it will be an enabler and an accelerator. So, its whole role will be to speed up the housing planning and delivery process for housing development, and to work with both the RSLs and the councils, and with our SMEs, to understand what the barriers are and to help us to overcome those barriers, to support new collaborative ways of working right across the housing sector and encourage schemes to be brought forward that promote innovation and partnership.

We're imagining that they will be able to help us with improving supply chains and understanding where the blockages are, advancing our modern methods of construction techniques and our capacity within the housing sector to do that, by looking at both the supply and demand ends of that, and to deliver training and upskilling and address ongoing gaps in capacity and expertise—so, like some of the things we've talked about already: SuDS, compulsory purchase and planning, phosphates, groundwork skills and so on. And then last, but not least, it will help us to bring empty homes back into use as rapidly as possible, and also to look again at the whole issue about decarbonisation and insulation.

We might want to accelerate that last bit. The conversation yesterday was around whether we could accelerate some of the installation issues, given the cost-of-living crisis and the problems in the energy markets, or whether we'll be able to assist people to access improving the insulation on their homes, and in particular, actually, helping the private rented sector to access that, by looking again at some of the categorisation that we have for the Wales leasing scheme. So, that's the scheme, just to remind the committee, where the landlord hands their house over to us in return for guaranteed rent for at least five years—longer than that—where we can persuade the landlord. We're considering whether to include very seriously improving the insulation standards of those homes as part of the deal with the landlord, because we know that that will help the tenants with their energy bills. We're really very concerned that people who won't be able to pay their energy bills will also get into rent arrears over the Christmas period and exacerbate the homelessness problems we were just discussing.

I was going to ask you about your views on access to the private rented sector, its affordability and the potential impact of Leasing Scheme Wales, which you just touched on. We know that the local housing allowance was fixed in 2016, again in 2020, and then we have to have the top-ups with the discretionary housing payments. That funding was cut as well, wasn't it? Was it £1.4 million to £1 million coming across as well? So, is that having an impact on your budget to help with the top-ups? And just the impact, really, on the private rented sector, the increasing costs of rents and availability, really—your views on that.

You're absolutely right, Carolyn. Am I muted? No, I'm all right. Sorry, I had a mute sign come up on my screen, then, for a moment.

We've got a real problem, haven't we, because the local housing allowance was frozen. For the life of me I cannot understand what the UK Government thinks it's doing in doing that, because it's clearly exacerbating enormous amounts of these problems. It's an easy intervention in the marketplace to just put it back up to the level it ought to be at. Nobody can understand why on earth they think that's a good thing to do, so we're baffled by that. But nevertheless, they have done it, so that means that people who are entitled to universal credit who live in private rented are not getting the whole of their rent paid and, in some cases, hardly any of their rent paid by it. I think Amelia will correct me if I'm wrong here, but we've seen some figures that show that the local housing allowance is as little as 3 per cent of the market in places like Cardiff, so we're talking about a very serious erosion of protection that people badly need. So, that makes no sense to us to us at all, and it's clearly causing us real problems, because guaranteeing that level of rent is then not sufficient in some areas of the market for landlords, which is why we want to look at other incentives for that.

There is a contraction in the supply of private rental properties in Wales, as some landlords decide to take advantage of the current house price bubble. We're very concerned that it is a bubble and that it will burst, and then we will have some serious problems with that as well. So, we're trying to gear up to make sure that we have interventions ready to go, if that does happen. I just want to emphasise one more time, though, that most landlords see their tenants as valued and respected customers and they have long-term relationships with them. But we do have some landlords capitalising on the current situation and increasing no-fault eviction notices to relet a property for a higher rent. So, we're obviously very keen to introduce our renting homes Act, and that's coming in in December to provide better protection for tenants in respect of no-fault eviction notices over the winter and beyond. Last week, we launched a consultation on plans to ensure that tenants will benefit from the six months' protection, rather than the two months' protection for existing tenants, as well as tenants going on to the new contracts.45

The rent increases are really worrying for us. We have increased, as I've said already, the various discretionary housing assistance grants, and the homelessness prevention fund is flexible enough to be used by local authorities to help those struggling to meet rental costs. We have reminded local authorities that they're able to assist people with bonds and so on, to get them into the accommodation in the first place.46

We are, of course, aware, Carolyn, of calls to introduce a rent freeze. I'm very interested in the announcement from Scotland. And I'm sure that you've seen that Shelter Cymru are asking for a much more measured approach to rents, because we were already seeing in Scotland as a result of the announcement that the evictions were going up. So, I think whilst that seems like a tempting short-term measure, it has an enormous immediate unintended consequence, with landlords coming out of the markets or immediately acting before they think a freeze will come in. So, we're very interested in looking at a proper system of rent control or rent setting, and we have commissioned some research to look into that, but I don't think a knee-jerk reaction without fully understanding what the unintended consequences in the market might be is the way to go. But we are watching very closely what's happening in Scotland. We've approached the Scottish Government for more information about what they're doing, and I've already spoken to various actors in the housing market here in Wales to see what their view is, including, as I said, the chief executive of Crisis. So, what we want to make sure we do is ensure that the supply of private rented property in Wales stays as stable as we can make it and as accessible as we can make it, because we rely heavily—let's be clear—we rely heavily on the private rented sector to house our people. We have large numbers of people who rely heavily on the private rented sector to do that, so we are committed to making sure that our landlords stay in that market, as well as ensuring that our tenants get a fair deal.47

So, we will be publishing a White Paper on new approaches to affordable rents in due course. It's part of the co-operation agreement with Plaid Cymru. We've commissioned that research already. And then, Carolyn, I already mentioned to you that we've committed £30 million to leasing scheme Wales over the next five years to improve access to that longer term affordable housing in the private rented sector, providing security of tenure for tenants and more confidence for landlords. But there is pretty strong demand, and we're very keen to bring empty properties onto the scheme as well, so this is where an empty property comes onto the scheme, is brought up to standard and then we have it over five, 10 or 15 years. So, we're very keen on the scheme and rolling it out right across Wales, and to take this opportunity to try and make sure that it gets as much publicity as possible.

Okay. Thank you for speaking on the rent freezes, because we've been asking about that this week in the Senedd, and no-fault evictions are a concern, and also the no-pet clauses as well. I know that we've asked questions on that. If that could all be looked at together for that White Paper, looking at capping of rents, possibly, which we are expecting to be published in the autumn, that would be good if you could cover all those.

I'm certainly happy to do that, Carolyn. Just on the pets, you can't have a no-pet clause; you have to have a reasonable arrangement. So, if a tenant asks for a pet, to be allowed a pet as part of their rental agreement, the landlord has to treat that reasonably. You can't just autocratically say, 'You can't have a pet.' But there might be circumstances in which the landlord would be right to ask for a higher bond or increased cleaning costs at the end of a contract, for example, but they are under an obligation to reasonably consider that request—just to make that clear. If you do become aware of a blanket no-pet clause, do bring that to my attention.

It does seem to be the default thing at the moment. Finally, could you give me an update on progress implementing the second homes pilot scheme in Dwyfor, please?

Yes, certainly. The pilot is now progressing at pace. We have two dedicated members of staff in place in the pilot area, working with the community and stakeholders. They are currently focused on baselining data and local housing need alongside Gwynedd Council so that we have consistent data and a solid base for evaluation to monitor the effectiveness of the various interventions. We swapped the guidance out on homebuy, launched exclusively for the pilot area and developed with Gwynedd Council and Grŵp Cynefin to take account of local circumstances. We've supported the pilot homebuy scheme with up to £8.5 million-worth of funding over the next three years, and we're already seeing traction, with a recent completion and several others understood to be in the pipeline. So, I'm very pleased with that intervention.

We've also made £1 million of funding available for the pilot area to revitalise empty homes, and we've got positive updates from Gwynedd on buy-backs—so, buying back social homes into the system. We've got an extensive engagement process with Gwynedd Council on the application of changes to the planning process. The regulations have been laid this week, as I'm sure the committee has noticed, and we've established operational and strategic groups of key delivery partners to ensure a shared understanding of and commitment to the pilot, working towards possible options for the local authority mortgage schemes and options for the private rented sector in the intervention area there. And we're working with partners on all possible options and opportunities for land acquisition or land assembly for affordable housing. We'll be delivering a workshop with the Dwyfor area committee on 3 October, and a pilot-specific web page will be launched after that workshop to make sure that everyone in the area can access the information.

Thank you.

Okay. Thank you, Carolyn. We move on, then, to Mabon ap Gwynfor.

So, Mabon, we have an agreement already with our social sector, as I'm sure you know, that we have no eviction into homelessness, and that's been a feature of Welsh housing policy for quite considerable time now.

I was very interested by the announcement in Scotland, which we were a little bit baffled by, because social house rents are set on an annual basis. So, I could tell you that social rents were frozen in Wales to next March because obviously they're just set until next March. I can also tell you that I consider, usually around the Christmas period, what we will do with social rents for the ensuing period. I don't know if you remember last year, but we had a sudden spike in the retail and consumer price indices, which are what are used to baseline social rent, and so we capped them last year at 3 per cent, because it had gone up over that for the first time.

I will be very seriously considering what we do for the next financial year here in Wales. I'm expecting advice from my officials about the various impacts. So, just to be clear, obviously we're very concerned about the effect of rent increases on tenants, but we have to also bear in mind that the rent is what pays for the social house building programme for registered social landlords and councils. So, it's a careful balance, isn't it, between making sure that people can afford it, that the people in social housing who are entitled to benefit of course get their rent paid, but large numbers of people in social rented housing are not on universal credit or don't get the full payment. So, it's about balancing all of that out. So, I'll be looking very carefully at what we want to do with that. But, the rents are frozen, if you want to use that language—they're set, I would use the language of—until March next year. So, there will be no rent increases over the winter for social rented properties.

I've already just discussed our attitude to capping rents in the private rented sector, and it's something that we are talking to the National Residential Landlord Association about and we're already looking at increasing the leasing scheme, as I said, and at two things on mortgage rescue. So, we're expecting that the house bubble will burst over this winter. We've already got indications that house prices are flattening or starting to decline. Unfortunately, I'm old enough to remember the last time this happened, with people in negative equity and all kinds of distressing circumstances. So, we're gearing ourselves up to be able to do mortgage rescue packages and to help people stay in their own homes by converting their mortgages into tenancies and helping the local authorities or registered social landlords to buy out properties that are in that position. 

We're also looking to see if we can have a mortgage scheme that allows people who've been renting and have good rent records to be able to access mortgages so that they can start a journey on to shared equity properties, for example, or other accesses to the market. We'll be looking again at our Help to Buy and so on.

And then, in terms of evictions in the private rented sector, I've asked officials to provide me with some advice about that, because although, again, it's a superficially interesting intervention, we know, from what we did in the pandemic, that when that came to an end, we had a tsunami of evictions. So, what I don't want to do is just push it down the line. What we don't want is to have people, who can't be evicted over the winter and can't pay their rent, finding that, in March, they are mandatorily evicted because they're in eight weeks or more rent arrears, because that's a mandatory eviction then. So, we need to be very careful that any intervention that we take doesn't make things worse for people down the line. I'd much rather get them to access help to make their rent affordable than to have people stop paying their rent and then pretty much face an inevitable eviction at the other end of the winter. So, we just want to calibrate it.

So, I'm in exactly the same place as you, Mabon—I want people to be able to stay in their homes; I just want to make sure that we do that in the most measured way possible and without any unintended consequences. So, we're working really hard with our tenants' organisations. I just met with Siarter Cartrefi on Monday morning to discuss a number of interventions, for example, and we'll be looking very carefully at that to make sure that we have all of the right calibrated interventions in the market to make sure that we keep as many people as possible in their homes, including talking to the residential landlords and making sure that we've got all the right interventions in place.

And then the last thing I want to say is that we've enabled RSLs and councils to buy tenanted properties. So, even when they don't come up to their development quality requirements—their standards for social rented homes—we're enabling our social landlords, councils and RSLs to buy tenanted properties that come on the market so that we can keep people in their homes in that way as well. So, I just wanted to put that last intervention on the table.

Well, we'll need to announce what we're going to do very shortly, won't we, Mabon? So, we've already put more money into the system. We're making sure that we get as much information out to our registered landlords as possible, through Rent Smart Wales and so on, to make sure that they and their tenants can access a discretionary housing payment, for example, and make sure that people can stay in their properties.

We've worked very hard with the National Residential Landlords Association to make sure that we myth-bust, because there's been a lot of misinformation around about rented homes in particular. Some of the stuff I've seen about what people think is happening is extraordinary. So, we've done a lot of myth-busting as well to make sure that we don't have landlords who think they want to come out of the market for all the wrong reasons. So, that's been an interesting process as well. And, as I say, I'm more than happy to intervene if we think the intervention will have the effect that we want. But what I don't want to do is intervene in a way that means that all we've done is basically stave it off and make it worse. So, we're very keen to see what analysis Scotland has done and if that analysis holds up, then we will obviously—. I've got no qualms about copying Scotland if what they're doing will work. But I don't know if you've noticed, but in Scotland, they've had a real problem with landlords immediately exiting the market. So, they really have had an immediate reaction to that from their private rented sector. So, we're really watching that carefully to make sure that we get our calibrated interventions correct.

Three per cent.

Absolutely, Mabon. That’s what I was saying about having to have a careful calibration of the decision about rents in the social rented sector. We start to make those decisions around December, so I’m just currently waiting on a set of advice from my officials, which will set out the pros and cons of various forms of action in the social rented sector.

Again, I can’t emphasise enough, many people who live in social housing don’t pay their own rent in the sense that it's covered by their universal credit. But many people do pay their rent, and so we have to make sure that it’s affordable for those people, and they tend to be in the lower pay grades across our public services very often, actually, so we need to make sure that we’re not going to make social rent unaffordable. But, at the same time, that rental income is what funds the new builds and the retrofits for our current social housing. Although, having said that, of course, we do provide registered social landlords and our councils with enormous amounts of money direct from the Government to carry out those programmes as well.

We have a formula that sets the rent in Wales. I’m happy to provide the committee with a paper for how that works. One of the things we always emphasise to our social landlords is that that formula is not a target; it’s a ceiling. Last year, I went through a big exercise with social landlords to make sure that they could justify any rent increase. So, there was a ceiling, but we were very, very hard on any social landlord that looked like they’d just gone to the ceiling in their rents for no reason. So, we expect them to go through a very detailed piece of work on their own particular financial circumstances, and the financial circumstances of their tenants, to set their rents at particular levels inside that ceiling. Now, that’s a decision I’ll have to make this winter in the light of the cost-of-living crisis, but in the light of the climate emergency and our need to build new social housing, and that’s what I meant by it being a very difficult and carefully calibrated decision. So, I have not yet made that decision. I haven't even got the piece of advice yet, Mabon, but when I have it, I’ll be looking at it carefully. But the normal situation is—one of my officials will correct me, because I’ll get this wrong now—it’s 3 per cent plus £2, I think it is; one of the officials will tell me exactly. But I don’t have to do that; I could freeze the rents if I wanted to, or I could put them up above that. Last year, we froze them—we capped them for a single year, because CPI had gone up above the 3 per cent. Of course, it’s way higher than that now, so I’m going to have to look at that very carefully.

Shall we just bring Amelia in, just for one moment, to tell us exactly what that formula is, because I'm sure I garbled that?

Emma, if you're happy—?

Shall I jump in, Minister? So, the rent policy for social landlords is normally CPI at the designated point plus 1 per cent, plus or minus £2. But there is that call-in clause within the policy that says that if CPI hits 3 per cent, then the policy doesn’t apply per se and it becomes a matter for your consideration, which is what we’re working through at the moment—various scenarios with social landlords, to be able to advise the Minister on the different various impacts that different approaches would have.

Thank you, Emma. I knew I’d garbled it.

Okay, thank you, both. Mabon.

So, Mabon, we're already giving local authorities very considerably more than the base budget for housing associations. Again, I'll defer to Emma, but around £1.8 million a month is going into local government on top of the usual budgets because we have this crisis at the moment.

We're working on a number of things with local authorities. The standards are really important to us. So, because we have a crisis, we don't want to just say, 'Oh, look, any house is better than nothing. Just shove people into any old nonsense.' But, we know that the standards we have are very high, so we're looking at lowering the standards slightly so that we can bring existing properties into use, for example, but in the certain knowledge that we will be able to bring these properties up to standard at some point in the future. So, we're working on that at the moment. I can't emphasise enough that it is very temporary and that the lowering of the standard is not huge. For example, we want to allow local authorities and RSLs to buy existing tenanted properties, and often they will not be at the standard of the development quality requirements, but we want them to be able to be brought up to that, nor do we want people to be trapped in what's called 'temporary accommodation', although it's a perfectly ordinary three-bedroomed house, for 10 years. We want them to be stable, don't we? So, we have to calibrate the system in the light of the current crisis to allow commonsense interventions, but without lowering our overarching goal of making sure that people live in easy-to-heat, easy-to-run homes for life. I'm not prepared to compromise on that standard, so we have to find a way through this conundrum of being able to fund both of those ambitions at the same time. I'm not in any way apologising for having that high standard and expecting that people in Wales should have the very best housing, and so we need to get through this crisis without lowering those standards to the point where we can't recover them afterwards. So, that's the game we're in.

And so, you're quite right, it will be a very careful calibration of how we fund it from the various funding streams that we have. But, just to remind you and the committee, obviously, we already give an enormous amounts of money out to the RSLs as well through the dowry payment schemes, for example, for the stock transfer authorities, and we will be looking again at the Welsh housing quality standard as well. As you know, we brought properties up to energy performance certificate D, but we will be looking at the next iteration of that as part of our decarbonisation plans too.

Thank you, Minister. Thank you, Mabon. Diolch yn fawr. Joel James.

Thank you, Chair, and thank you, Minister, for coming today. I was just wondering if I could talk about building safety, really, which, funnily enough, is something I mentioned this week in First Minister's questions. I know from that discussion it was identified that about 163—I know your submitted report mentions 161—buildings have been identified for intrusive building surveys. I was just wondering what the latest is with that, because, originally it was identified to be completed by the summer. There's talk now it will be done by the autumn. One of the issues I brought up in First Minister's questions was about the impact that that delay is having on people wishing to either mortgage or remortgage or even to sell their properties, really. I was just wondering if I could have an update on what the latest is with those building surveys and whether or not you think that is in itself having an impact on the housing market. Thank you.

Certainly, Joel. So, as of 23 September, we completed the intrusive work on 38 of the 163 buildings, and the remaining 125 buildings that require further intrusive survey work are due to be completed this autumn. We have had some delays on some buildings due to building access, where we've had real problems getting the managing agents to allow access, so we're just looking again at how we can get past some of that. We've got the capacity in place to be able to complete the survey work by the end of September, on the assumption access will have been provided to all buildings by then. It might go over another week, Joel, if we can't get access to that. I've just asked my officials to look again at whether I can intervene personally with some of the responsible owners to make sure that we get that access granted as soon as possible to allow the works to be completed. So, I'm happy that we're going as fast as we can there, and I'm very hopeful that we'll get some of these buildings into the actual remediation phase very soon.

Thank you, Minister, for that response. I was just wondering if anything had been done in terms of looking at the impact that it's having on the housing market. Has anything been done, any assessment there?

As you know, we've got a rescue scheme in place there as well. So, people who are trapped in those buildings and need to move on for various reasons and financial hardship can apply to our scheme. We have a buy-out scheme, effectively. I would encourage anyone who feels that they're in that situation to apply through that scheme. I'm going to review the terms of that scheme. We haven't had that many people go through the scheme, so I'll be reviewing the terms of that scheme to see if we can widen out its scope, given the numbers that we've got. So, yes, we have looked at that, Joel. I will say as well, though, that the rental market inside most of these buildings doesn't seem to be particularly affected. We still have people renting out properties in most of the buildings affected, seemingly without any effect on the price.

Okey-dokey. Thanks for that response. Another question I wanted to ask was: the committee recently met with the Welsh Cladiators—I think it was just before recess—and one of the things that came up in the conversations we had with them was regarding the Building Safety Act 2022 and how, in England, they have remediation contribution orders. I was just wondering what your thoughts were on that and whether or not something similar needs to be done in Wales. Thank you.

We've always taken a slightly different view of this than the English Government, as it is for this purpose. We've always maintained that the people who created this issue should be the people who are responsible for rectifying it. Leaseholders in Wales already have improved routes to redress through the Defective Premises Act 1972, building liability orders and building information orders. We're developing, as the committee is well aware, our own building safety Bill for Wales, and we're looking at all provisions for the occupation phases of a building, including what measures to address remediation should be included in that. In terms of remediation contribution orders, it is one of a number of measures I'm looking at, along with provisions to help identify who is actually responsible for the defect, who is actually responsible for paying for it through mediation, and ensuring that the person responsible does pay and faces consequences if they don't. We'll be looking to include provisions within the building safety Bill, and I've asked officials to explore all avenues to bring the provisions into force in Wales as part of that.

Thank you, Minister, for that response. Just one final question, Chair. You mentioned there the Welsh building safety Bill, and I was just wondering if we can have an update on the progress. What's the latest with it and when do you think it might come to the Chamber for us to discuss it? Thank you.

Certainly. It's very much an important part of the co-operation agreement and part of the programme for government. In January 2021, we consulted on the building safety White Paper, which set out our proposals for comprehensive reform of the legislation that contributes to building safety in Wales. It focused on the three key areas identified as part of the Hackitt review and the ongoing Grenfell Tower public inquiry, which were: establishing clear lines of accountability by creating new roles and responsibilities or duty holders for those who own and manage the buildings; driving up standards by improving industry competence and making sure that safety features are designed into the fabric of the building, that their use is properly understood, and they are installed correctly by people with the right expertise; and establishing a stronger, more coherent regulatory system that would hold those responsible to account, with really serious consequences for attempts to cut costs at the expense of the safety of the building and residents. We're in discussion with legislative colleagues on the timings for the building safety Bill, which will be definitely brought forward in this Senedd term, but I'm afraid I'm going to provide the committee with my usual response on the exact timing, which is that that's a matter for the First Minister and not for me.

Okay, thank you.

Thank you very much. Sam Rowlands. Sam.

Thank you, Chair. Morning, Minister. I just want to build on the points that Mabon mentioned earlier in relation to the decarbonisation agenda for social landlords. Our committee today is likely to note a letter from Community Housing Cymru, the Chartered Institute of Housing Cymru and Housing Leadership Cymru, which I'm sure you've had sight of as well. And they set out in their letter, as they describe it, their 'grave concerns' about the decarbonisation target, and they say the proposals 'are not deliverable'. They're saying they'll have,

'a significant impact on services and the ability to build new homes',

just to quote from their letter. You mentioned earlier about getting this calibration of all sorts of different factors and proposals right. Do you think that calibration is slightly out of kilter now, considering the comments from those housing representatives? 

Thanks, Sam. So, we developed the proposal, as we always do, in collaboration with the sector, and the consultation that you're quoting one of the responses to allows stakeholders the opportunity to give us their views on the current proposals, and obviously we're aware of those views. We've had concerns about the funding required and the time frame during the extensive engagement we've been undertaking during the consultation period. We obviously welcome that feedback, and we'll make sure that all the views are taken into account. We've commissioned an independent analysis of the consultation responses. Once we've had that analysis back, we'll consider it carefully, publish the analysis and our response to it. But it's not finished yet, so I'm not able to give you that right now. 

We absolutely accept the targets are challenging and bold. We're bold and ambitious to build a greener, fairer Wales. We want to contribute to tackling the climate emergency and make a real difference to people's quality of life. I just want to remind the committee that we were also told that the original Welsh housing quality standard was impossible to achieve, couldn't be done, completely ridiculous in its ambition, just off-the-wall mad, and we've done it. So, I'm very keen to make sure that the sector's concerns are taken into account, but also that they really put their best foot forward in terms of what we can do here, because energy efficiency of social homes is one of the only ways of getting people out of fuel poverty.

So, I'm really, really keen to make sure that we have tenant-focused excellence here; we need this both for the planet and for individual tenants. But of course we understand the concerns over funding requirements, and we continue to work with the sector to develop the final version and explore all the viable funding solutions. And as I was just saying in answering Mabon, these are finely calibrated decisions all the time about what the funding stream looks like, what the funding from us looks like, how we can use public funding to lever in private sector funding to make sure that we accelerate the work that we learned during the Welsh housing quality standard work out into the private sector and the private rented sector, for example. I assure you that we are absolutely listening to that feedback, and we will be working very closely with the sector, who we absolutely rely on to be able to deliver whatever it is we end up deciding we're going to do, and we do that in collaboration with them, of course we do.

Okay. Thank you, Minister. I'm pleased to hear that you will be listening to their concerns seriously, as I'm sure you always do. Just moving on, you wrote to the committee at the start of this year in relation to the Welsh housing survey—I think it was a response to the National Residential Landlords Association letter to yourselves. And you said in that letter that officials will be considering the business case for a future housing survey during 2022. I'm just wondering how that's progressing.

I'm going to ask Emma to come back to you on that, Sam, if you don't mind, because I'm afraid I can't remember the answer to it, I'll be absolutely honest. So, Emma.

Thanks very much. And I think it's fair to say that that work hasn't progressed as rapidly as we might have hoped. Other matters, including the response to the Ukraine arrivals, has deflected from that work, but it is still our intention to progress and investigate that.

Okay. Thanks. I'm sure that, when that work is progressed, it'll certainly help provide a really helpful baseline for evidence, for, I guess, future decision making as well. And I guess that's their concern. Chair, I appreciate the time is running away, so just a couple of other points, if you don't mind. You mentioned earlier, Minister, about the landlords who are—private landlords—leaving the sector in Wales, and some of that concern, going back to that calibration issue. The fact is that twice as many landlords in Wales are leaving the sector, compared to other areas of the UK. So, going on to the Renting Homes (Wales) Act 2016, do you think that’s having a significant impact on the potential supply, then, of private sector landlords?

I’m not sure where you’re getting that figure from, Sam, because that’s not the figure that we have. I’ve just asked for a review of the figures we’ve got from Rent Smart Wales, but the figures I currently have are, between January and August this year, 3,233 landlords have either deregistered with Rent Smart Wales or have allowed their registration to expire. In the corresponding period, 3,904 landlords have registered with Rent Smart Wales. So, it kind of balances out.

Yes, sorry—it was the Propertymark data from this year.

Okay, so—. Well, it’s interesting to know how the calibration works. So, I’ve asked for Rent Smart Wales’s data to be interrogated a little bit more, Sam, so we can understand rather better what the disparity between the two—. I've met with Propertymark, and I’ve heard that data from them, but that’s not what our data shows us, so I’ll be interested to see that.

Nevertheless, what we want to do is work with our landlords to make sure that they are valued in the sector. We value the private rented sector; as I said in answer to an earlier question, we rely heavily on the PRS to house our people here in Wales. Large numbers of people make their home very permanently and happily in the private rented sector, so we want to make sure that we work very closely with our landlords to make sure that they stay inside the private rented sector. There are a lot of myths around about renting homes—a lot of myths—so we’ve been working hard on some myth-busting work via Rent Smart Wales to get out to our registered landlords, I’ve met with the residential landlords association, and we’ve been doing some work to make sure that people understand what it means for tenants and for landlords.

But it’s a combination of things, I would say; it’s the incredible house price bubble that we’re experiencing right across the UK and here in Wales, though that looks like it’s slowing and even reversing now, so I really do hope we’re not going to get a massive crash, as happened last time we had this kind of bubble. And there’s no doubt at all that there are some landlords who are taking advantage, thinking they’ll get a better price for their house now than they might in the future. And as I say, we’ve enabled RSLs and councils to buy tenanted properties, with a view to trying to keep people in their houses, and getting out to landlords that, if they want to sell, they should approach an RSL or a council to make sure that they can’t just sell it with a tenant in the property, rather than evicting them. And we’ve been working hard with the residential landlords association and Rent Smart Wales to get that information out to people.

Okay, thanks, Minister. And again, I'm pressed for time. You have dealt with some of the renting homes Act points previously, but perhaps, just to wrap up this section, I was wondering what lessons you’ve learned so far as you work towards implementing the renting homes Act.

Well, we will do a proper 'lessons learned' once we’ve actually got it implemented, but I’m tempted to be a bit irreverent here, Sam, and say, ‘Don’t try and do a fundamental rejig of the entire housing market in an Act of the Senedd.' I think if we were doing it again we might do it in tranches, because it’s a seismic revolution, really, in the way that we regulate tenancies in Wales, and it’s turned out to be a lot more complex to actually implement than anyone thought at the time, including those of us who were in the Senedd, who passed the Act in the first place. So, we will do a proper 'lessons learned' from it, but I think the biggest one of all is to make sure that we calibrate it and understand the real scale of the change that we’ve made so that we can work on that implementation. Sorry, my voice is giving out now. Apologies. I’ll just have a drink a minute.

We’ve always promised that we would give our landlords six months’ notice. We’ve managed to do that. We’ve always wanted to work in conjunction with them to make sure that we have the smoothest transition possible, and we’ve got a communications and engagement campaign that started in January. We’ve issued monthly e-shots to PRS landlords, informing them of key aspects of the Act. We’ve written out to them, all landlords who are offline—so, we don’t have an e-mail for them—informing them of key changes, and we’re starting a two-week radio awareness campaign in mid-October to inform tenants and landlords alike about the Act. We’ve got online digital advertising via Google search, Rightmove, TikTok, Instagram and Facebook, and there’s going to be a heightened campaign in November on tv to get the information out as well. Sorry, my voice is really giving out.

I’m looking forward to those TikTok dances, Minister. [Laughter.]

Okay, thank you, Sam, thank you, Minister. Jayne Bryant.

Thank you, Chair, and thank you, Minister, and hopefully your voice will just hold out for the last couple of questions, but really appreciate the evidence that you've given us today. Just finally from me on regulation of housing associations, if you could perhaps expand on the reasons why a new regulatory framework for housing associations has been introduced.

Yes, thanks, Jayne. We're absolutely committed to continually improving the way that regulation operates to achieve the outcomes of protecting tenants and investment in social housing, but, more importantly, really, to achieve an overall better outcome for tenants in social rented housing. The old regulatory framework was introduced in 2017 and it was subject to a light-touch review after the first year, when some minor changes were made. And then, during the pandemic, we had a very light touch to regulatory assessment so that RSLs in particular could focus on providing services during what was obviously a very challenging period for everyone. 

But all during that period, we were doing work on developing a new regulatory assessment model to provide increased rigour, consistency and proportionality in reaching our judgment. So, the new framework incorporates a revised regulatory standard, which emerged from the review, alongside a much clearer traffic-light-type judgment format, which was suggested, actually, by one of the tenants at one of the review consultation sessions, and an explanation of the revised assessment model and the expectations of an RSL during the assessment process. So, the revised standards will respond to emerging risks and issues, including a much greater emphasis on tenant engagement and involvement, and responding to some of the issues identified following the Grenfell tragedy—so, centred around listening and responding to tenants' concerns, as well as the important equality, diversity and inclusion agenda.  

So, RSLs in Wales must be able to evidence that they're creating a culture that values and promotes tenant involvement in strategic decision making and in the design and delivery of all their services. There is a requirement to keep tenants safe in their homes set out clearly in the standards, and achieving high levels of tenant satisfaction with services, making landlord performance information available to tenants, and demonstrating that landlords learn from complaints that they receive, so they don't just solve that complaint and then don't look to see underlying causes. 

The standards all align with our anti-racist Wales action plan, and they've got to understand and reflect the diversity of the communities they work with across all their activities and deliver measurable, evidence-based equality, diversity and inclusion commitments, including the anti-racism and tackling hate crime things. We've had nine judgment reports published to date. One judgment under a review notice has been published, which is a new feature of the revised framework, giving public notice to regulators looking into matters that could affect their judgment in the future. The feedback on the revised framework and new format reports has been positive to date, and the regulation team is working with the sector to capture feedback and learning from the implementation of the new standards. 

Thank you, Minister. That's really helpful. I think it was in July that you announced the dissolution of the regulatory board for Wales, and I'm just wondering what you see for that replacement advisory body. 

Certainly. So, we commissioned work around improving the board's terms of reference and its governance, responding to the changing operating environment for RSLs since the establishment in 2016. So, again, Jayne, this was a board that was established with the old regime and now trying to adapt to the new regime. That exercise established there was very little agreement on the fundamental questions of core purpose, role and remit. There were significant differences of views about how the board should operate and its parameters, and some of the themes identified also raised concerns as to full compliance with the governance code on public appointments.

So, it was just a much wider range of issues than we had anticipated when we undertook the review, and with the cost-of-living crisis beginning to bite, further pressures on landlords and tenants, I took the view it was just the right time for a fundamental re-evaluation of the way the regulation function is supported, taking into account all of the new external factors, including the impact of the pandemic, the new ministerial and Government priorities for housing, the cost-of-living crisis and the general fiscal context overall.

It was not an easy decision to make. The board members had worked very hard, and it's not a reflection on them in any way. I went out of my way to thank them for their work, but the time is now right to look at how we can get the regulatory function in Wales to be best supported to support the new regime in Wales and to make sure that we have a sector that's fit for purpose and has tenants' satisfaction and tenant sustainability at the absolute front and centre of its work.

So, we will now be continuing to engage with the sector, representatives of the regulatory advisory group, Shelter Cymru, TPAS Cymru, Tŷ Pawb, the Welsh Local Government Association, CHC, UK Finance and CIH, all represented on the group that's working with us to get stakeholder perspectives. And I'll be asking officials to work with sector representatives over the coming months to get a set of options to ensure that we have a really comprehensive support system to provide independent scrutiny and insurance on the new scheme as soon as we can.

Thank you for that answer, Minister, and I hope you feel better soon.

Sorry about the coughing. [Laughter.]

Thanks, Jayne. Minister, just one final question before you go, and perhaps get a nice hot drink or something, on decarbonisation of homes in the private sector. How will Welsh Government be supporting that?

As you know, John, we've been running the optimised retrofit programme for quite a considerable time now. And one of the things that we've always wanted to do is to make sure that the learning coming out of the ORP, as we call it, is picked up when we spread it out into the private rented sector. So, we've started evaluating a variety of options for financing retrofitting in the owner-occupied and private rented sectors, including looking at grant funding, repayable finance and the financial capacity of the end user to help them get the most appropriate financing solution in the medium term. We're going to be looking at models that include things like property-assessed clean energy assessments, in which a loan is linked to the property rather than the individual, low interest loans, equity release loans, and remortgages, and we're also looking at a grant mechanism for lower income households. I've had a really helpful meeting with the Development Bank of Wales, who we're working with hard to ensure that we align the offers of work in the space. We're going to have to have, and we've always known this, innovative funding models to pay for the decarbonisation of homes in all tenures. There's no way the Government can afford the costs of this all by itself. So we're bringing together a panel of experts from across the finance sector to work with us to evaluate options and shape viable funding solutions for that.

We'll also be investing into the new housing net-zero carbon performance hub to provide support and guidance to all those involved in residential decarbonisation, and to bring expert guidance together on all aspects of decarbonising your home on a [Inaudible.] basis. So, we'll provide social landlords with access to expert advice in the first instance, John, and then we'll be able to spread that after the first year, expand to help private landlords and owner-occupiers as well. So, as expected, we'll be taking the learning from ORP, to be able to advise people what would best decarbonise their particular type of house—what the best tech looks like, what the best solution overall is. And obviously, one of the other things we're doing is, we're starting to do this in the social sector, also with a view to increasing the skills base in the private sector, so that people can access builders who know how to do the work as well.

Okay, Minister, thank you very much indeed. And thank you also to all your officials for giving evidence to the committee today. You will, of course, be sent a transcript to check for factual accuracy in the usual way. Diolch yn fawr.

Thank you very much, and apologies for the coughing.

Not at all. Thank you for being with us, despite your current difficulties with obviously a heavy cold, Minister. Thank you.

Apologies. Thank you, John. Bye.

Bye, then. Okay, committee, we'll break briefly then, until 10:30.

We reach item 3 on our agenda today, then, which is a further ministerial scrutiny session with the Minister for Finance and Local Government this time. Welcome to committee today, Minister. Would you like to introduce your officials, or your officials to introduce themselves for the record, please?

Yes, of course. I'll ask officials to introduce themselves.

Thank you. Good morning, everyone. Bore da. Reg Kilpatrick, director general for COVID recovery and local government.

Good morning, all. I'm Claire Germain, deputy director, local government performance and partnerships.

Morning. Emma Smith, head of local government finance policy.

Okay, thank you very much. We begin our questions, then, with some initial questions from Carolyn Thomas. Carolyn.

Thank you, Chair. I'm just going to mention cost pressures with local authorities. So, they've had 10 years of austerity, and I believe Andrew Morgan, who's the leader of the WLGA, is describing the current situation as 'austerity on steroids' now—really concerned going forward, with cost pressures, pressures for capital projects going forward and recruitment as well. I was wondering what are your views on this. Are you meeting regularly with the local authority leaders? I know that north Wales authorities in the past have called for a revision of the budget, the formula, but I'm hearing that also, the larger authorities, such as Cardiff and Rhondda Cynon Taf, are facing huge deficits, going forward. So, £40 million has been mentioned, £45 million; it's such a mountain to climb. So, your views on how they can address that, please.

Yes. I would agree with the assessment of the leader of the WLGA in the sense that the situation that we're seeing at the moment is extremely serious in terms of public finances. So, you'll have heard me say that, in recent days, we've done some work that looks at the recent figures from the Institute for Fiscal Studies and from independent reports published by HM Treasury, which show that the Welsh Government's budget, over the next three years, is worth £4 billion less than we originally understood at the start of the spending review. We know that, for next year, that figure will be around £1.5 billion, and, of course, that really does have implications for what we're able to provide with that funding. So, the situation is really serious.

I do understand as well that local authorities are absolutely, this year and next year, showing a gap in the funding that they would need to deliver their plans, as they exist. We're facing the same kind of gaps in Welsh Government as well, and that's because of the impact of inflation, and the fact that the Chancellor failed to allocate any additional funding for public services in the mini budget at the end of last week. So, the situation is really serious. I think one thing that we do have in our favour here in Wales is the way in which we work. So, obviously, we work very, very closely with local authorities, with all of our social partners, and that, I think, does help us address these problems in a different way. So, I think that that will be one of our strengths going forward. We have put in place fortnightly meetings now with local authority leaders, so I'll attend all of those meetings, if I can. But then, other Ministers will also join for discussions on the pressing issues of the day—inevitably, cost of living is going to be up there, alongside the pressures in terms of supporting people coming from Ukraine, also housing and other service pressures over the winter period as well. So, those fortnightly meetings I think provide us with a chance to address issues in a really urgent and current way, with all partners around the table. So, that's a really helpful innovation, I think.

Can I just ask about funding for capital projects? In the programme for government, you know, there are lots of good schemes going forward—building council houses, twenty-first century schools, et cetera—fantastic schemes that need, though, match funding from local government. I know that the cost of achieving these has gone up as well, hasn't it, anyway, with the cost of living, which is—it may need to be reassessed, what we can do, going forward.

We met with local authority leaders in January, and they mentioned then about highway schemes and the cost of doing those. And in this report, it says about how the price of bitumen has gone up by 60 per cent, even, and this is just one example—I do go on about highway maintenance, as you know. So, would you look at maybe reallocating some of those capital budgets? There are just concerns about deliverability as well. I know that there was £230 million allocated over three years for active travel; there is £500 million allocated over three years for trunk road agencies; £31 million allocated for 20 mph schemes—those are the ones I'm recalling. The £20 million that was cut for highway maintenance, I know that you were able to find money in the budget last year, which was underspend from the highway budget, I think, so you gave councils an extra capital sum of, I think it was even £70 million, which was gratefully received, and they were able to put that £20 million towards highway maintenance, but they'll be scraping the barrel again this year. So, could you rethink, maybe, some of those allocations? There's usually underspend, even, with the trunk road agency of about £500 million, which is allocated over three years. If you could perhaps slice some of the other budgets to ensure that they can carry on with maintenance; it's just the backlog of pothole maintenance, it's £1.5 billion, I believe, and it will just carry on deteriorating. And also, the deliverability of the schemes because of the lack of technical officers is an issue. They might struggle to deliver those schemes because of that as well, so there could be an underspend in those budgets. So, if you could look at reallocating, that would be gratefully received, I think, by them.

I think the issue of capital budgets is absolutely critical, because as you know, over the three-year spending review period, our capital budget falls in real terms every year, and is worth 11 per cent less, and that's even before taking into account inflation over that three-year period. That has impacted on the capital settlement that we've been able to offer local authorities, unfortunately.

We did undertake a zero-based review of our capital plans as part of our spending review, and it's the first time that we've done that in Wales, and we're the only part of the United Kingdom to do a zero-based review. We did that through the lens of the climate and nature emergency, to try and refocus our efforts, really, knowing that capital spend is one of the areas where you can really make a difference. That is reflected, then, in some of the allocations that were provided to local authorities. You're right to say that the £20 million a year, three-year, time-limited fund did come to an end, but we have provided for the second and third years of the spending review an additional £20 million for local authorities, specifically to assist them with decarbonisation, because that's one of the areas where they said they needed additional support.

So, I think that the point is right that local authorities will inevitably end up doing less or doing things over a longer period than originally planned. We know, for example, that schools cost 50 per cent more this year than they did last year to deliver, so there are lots of real-world implications, really, for delivery in terms of the capital budget, which continues to be really, really tight, especially in the context, of course, of the £30 million being taken away from Welsh Government to support the efforts in Ukraine. Of course, the UK Government should be supporting Ukraine, but it's a reserved responsibility, so they shouldn't be looking to devolved budgets to support them with that.

Thank you.

Carolyn, are you content with that?

Yes.

That's quite a figure, that 50 per cent increase in the cost. That's new schools, Minister, is it?

Yes. We know the inflationary impact is particularly severe in terms of construction costs, and that is impacting on delivery of the sustainable communities for learning programme. It is considered manageable within the existing resources that we have at the moment, although by 2024-25, we are expecting there to be pressures of around £15 million in that programme. And again, this is one of those areas where mitigating actions might include slowing down the delivery of the pipeline. But, of course, we are committed absolutely to that programme, recognising the importance of good learning environments for children and for young people. So, at the moment, programme officials are working closely with local authorities and further education institutions to manage those cost pressures that are being identified at the moment, but I think that's just one really stark example of where we're seeing the impact of inflation. 

Okay. Could I ask you, Minister, about local authorities and another aspect of increased costs, which is the very competitive labour market that we have at the moment? It is going to be more expensive to meet those salary costs for social care workers and educational sector workers for local authorities. So, obviously, they need those key staff in order to be able to deliver those essential services. So, is that part of your dialogue with local authorities at the moment? And could you, in addressing those issues, touch on the costs of the real living wage for social care workers and whether the additional funding that's been provided is likely to be adequate now?

Yes, certainly. Public sector pay is one of the greatest concerns, I think, that we have in Welsh Government because of the huge impact that it does have on budgets, in the sense that around 50 per cent of the Welsh Government's budget is exposed to pay in one way or another. So, a 1 per cent increase in pay in the public sector would cost around £100 million, for example. So that really does give you a sense of the scale of that particular challenge. 

Of course, when it comes to staff employed by local government itself, those negotiations take place outside of Welsh Government. Those are undertaken on an England and Wales basis, so that's not something that we are directly involved in. But I know that you're particularly concerned about the impacts on social care workers, of course. I think that the First Minister has supported the national Living Wage Foundation's announcement in terms of the rise in the real living wage from £9.90 an hour to £10.90 an hour. And that's 10.1 per cent. So that will hopefully benefit thousands of workers who have supported and signed up to the real living wage in the social care sector. 

And of course, aligned to the introduction of the real living wage, which we supported through the budget for this financial year, we also had the additional payment scheme, which made payments of £1,498 to over 65,000 social care workers. So that, we felt, was an important bridge, really, to get them to the real living wage point. So, we are trying to support the sector in that way. But I think that everybody recognises that this is an area of particular concern. So, I have discussions quite frequently with the Minister for Health and Social Services on this, and obviously the Deputy Minister for Social Services, who have direct responsibility for those sectors. And obviously we'll be considering the impact now of the real living wage in terms of the draft budget planning for 2023-24.

I think things are less severe in terms of workforce retention in the education sector. I think the overall position on recruitment is relatively robust there, but, of course you see pockets of concern where there is difficulty recruiting to certain secondary subjects in particular. And if the Minister for Education and Welsh Language was here, he would talk to you about some of the interventions that he has put in place, such as additional support for newly qualified teachers. There has been further funding allocated to that, and also significant funding to support the mental health and well-being of the education workforce as well, recognising that it's important to support them in that way, especially after the difficulties of COVID, and so on. So, I think there is lots going on in that space in terms of recruitment and retention, led by other colleagues, I have to say. But, I'll check, maybe, if Reg has got anything to add on that. 

Thank you, Minister. Just to say, I think we are acutely aware of the staffing pressures across local authorities, not simply in terms of pay pressures, as the Minister has described, but also the availability of skills and the availability of people to actually do some of the really critical jobs like social care and some other jobs within schools—support workers and so forth. We are in constant dialogue with the WLGA about those pressures. I and my team are talking to the Society of Local Authority Chief Executives about how they can work together in order to recruit and locate the individuals, and I think Welsh Government is also working to try and find colleagues from overseas. But in terms of the financial pressures from the workforce, which we know are significant, those get discussed in quite some detail through some of our financial consultative mechanisms, the finance working group being chaired by the Minister, and that's where some of these pressures are put on the table. But as the Minister says, we look to each sector to have those detailed bilateral discussions with individual Ministers—so, the Minister for health and social care, for example—to draw out some of those pressures, which we can then feed into the overall budget process and final allocations, which would obviously be made later this year.

I'd add as well that there are other quite specific areas where local government expressed some concern about particular areas of difficulty in terms of attracting and retaining staff. Procurement is one of those areas, so we're doing lots of work with the procurement profession to try and upskill the sector, alongside what is quite exciting work in terms of thinking differently about spending public money, looking through that lens of the foundational economy and things, so lots of opportunities there, but we do provide support for training in that sector.

And also environmental health officers; we know that they are hard to come by and are very valued, so authorities are working together across boundaries on those particular issues as well. So, I think that collaboration is important in that space as well. But there are some particular fields of expertise where authorities are struggling to attract and retain staff.

Okay, thank you very much, Minister. Mabon ap Gwynfor. Mabon.

We've taken a different approach to the management of reserves through the spending review period. Up until now, it's been our normal practice to retain a very small amount of money as a contingency within Welsh Government, as an unallocated departmental expenditure limit of around £100 million, which in the greater scheme of the Welsh Government's budget and the pressures is very small. And that's to help us with things like tax volatility, for example. So, we would normally retain around that £100 million, which we've done in this year as a transitional year, but from next year, we're not retaining any unallocated DEL, but we'll be managing any in-year pressures through the Wales reserve, which means that, of course, we'll have to find ourselves in a position where we have sufficient funding within the Wales reserve. And that was taken as a new approach, really, to managing the finances and managing the pressures, in the sense that it means that we allocate out everything available, really, to all MEGs at the start of the year, so that they have that kind of certainty in terms of planning their budgets, but also there'll have to be a lot of discipline within MEGs to remain within the boundaries that they have, rather than coming to the centre looking for extra funding from reserves.

So, that's been our strategy, and of course we publish all of this absolutely transparently through our budget process. And also, you'll have an updated situation report in the supplementary budgets as well. So, I'm happy to write to committee with the very latest following the supplementary budget, but obviously that will show the position at the point at which we voted on the supplementary budget.

Within this year's reserves, obviously, there are lots of pressures on it, for example, there'll be funding required to support our efforts to help people who are fleeing Ukraine. That was something that we hadn't anticipated when we set our budget plans, but that will be something that we'd be looking to reserves to cover a good deal of. There will be work for departments to do as well in terms of managing some of that additional pressure. But, as I say, the reserve is very small, and it's there to manage extreme pressures, rather than being something that we hold back to allocate through the year.

Can I come in on that?

Yes.

We have been in regular discussion with the local government pension schemes for some years about how they use their money to best effect within Wales. The challenge there is that the duties of the trustees of those schemes are to, actually, administer those schemes in a way that will achieve sustainability and provide a return for the pensions. However, I think all of our discussions have been focused on how those very considerable funds might be applied in Wales. I'm sorry I don't have any examples of how that might have happened, but we can certainly follow that up with the schemes and provide the committee with more details. But it is worth underlining that we haven't set any percentage; we have taken a much more collaborative dialogue with the trustees of the schemes in order to try and focus their investment, wherever they possibly can, back to Wales.

As I say, we've had discussions around how the schemes may invest in various different aspects of Welsh public service, and, certainly, housing would be one of those. I'd be happy to take that away for a discussion, but, as I say, the final decision about how pension funds are invested will inevitably be outside Government and be with the trustees. But, certainly, housing, we would be very happy to go and have that conversation with them.

Can I add, coming at the issue from a different perspective, that Welsh Government has been keen to promote the attractiveness of pension funds investing in RSLs here in Wales in order to increase house building and so on? That's something that I was dealing with back in my housing days, and I'm sure that Julie James will be able to provide an update as to where things have got with that, because that's been something that I know we've been interested in in the past. I'm sure there's probably still good work going on in that space at the moment.

I just want to be really clear with all colleagues at the moment about the level of pressures that Welsh Government and local government are facing and the lack of additional funding to meet those pressures. So, we are in the space now of, if we want to do more in one particular area to meet those pressures, we have to dis-invest from other areas. I think that that kind of rounded conversation is really what we need, in the sense of understanding if we are going to divert investment to support particular interventions, then we'll need to know where we're diverting that from. These are really difficult conversations, because the example that has just been given now is something that we absolutely want to do more of in terms of helping the most vulnerable people off the streets and into temporary accommodation, or ideally more permanent accommodation. Equally, it's the same discussions that we're having in terms of supporting people who are coming from Ukraine, to ensure that they're able to access housing as well. So, housing is definitely one of the biggest areas of pressure. I know that you've had the chance to talk to Julie James this morning, but the overall picture of public finances is that we don't have large amounts of money now to be allocating to do new work. We are very much in the space of having to look at how on earth we can maintain our existing plans at the moment, I'm afraid.

Okay, thank you, Minister. Diolch yn fawr, Mabon. Jayne Bryant.

Thank you, Chair, and good morning, Minister. I'm just interested in the way that these decisions are made. How are you working within Government and outside with others? You've mentioned some of the fortnightly meetings with local authority leaders to try and navigate these financial pressures. You've just outlined starkly how severe these pressures are.

We have really good engagement, both at ministerial level and official level, with local government. We do have those fortnightly meetings now with local government leaders. I also have a whole range of other engagements with local government. I attend every other meeting of the WLGA executive committee, for example, and take opportunities to meet with Solace, the Society of Welsh Treasurers, all kinds of organisations that have a bearing on local government and local government finances. But, importantly, at official level, there's a lot of work going on with authorities and with treasurers to understand the pressures locally. That kind of engagement is almost daily, I would say, with local authorities on the part of officials, to understand and quantify the pressures, so that we can better understand the picture, and difficult decisions are inevitably, I think, going to have to be made.

Thank you. Thanks, Minister. Just going back to expand on the scoping exercise to identify opportunities to reduce the administrative burden on local authorities, can you say a bit more about that and what changes we could expect?

Yes. This is an important piece of work that is part of our programme for government. I have met with local government leaders on several occasions during the development of the plans, and obviously we'd want to continue to do that. I've had a discussion particularly with the leader of the WLGA in the first instance, to discuss the plans and to impress upon him how genuinely open this discussion is in terms of understanding where we might be able to reduce the administrative burdens. I also see it very much as a piece of work for the whole of the Cabinet. This isn't just something that I have to lead on, because many of these aspects will reside in other portfolios. I wrote in June to all Cabinet colleagues, outlining how I propose to take the commitment forward and seeking their support for their officials to work with mine and with local government. Obviously, all colleagues unanimously agreed that this was an important thing to do.

So, alongside meeting Andrew Morgan, the leader of the WLGA, I also then wrote to all leaders in August to explain the proposal to undertake this work and to confirm that the commitment must really result in some real change, not just be about identifying problems. Officials are also liaising with the WLGA, the Society of Local Authority Chief Executives and also with some nominated representatives from local authorities, in order to discuss what I think will be a broad range of issues, looking at where these areas are, really, where there are administrative burdens and what we can do to relieve them, because there must be some sensible things that we can do to support local authorities in this particular area. But it's an interesting piece of work, and I think it will result in some specific recommendations of things we can do, but then hopefully also a set of principles for the future in terms of the kind of areas where administration is required of local authorities, and to try and make it simple and as unburdensome as it can be, whilst also, of course, recognising everything we have to do in terms of meeting various requirements—legal requirements and so on.

Thank you, Minister, and diolch, Cadeirydd.

Okay. Diolch yn fawr, Jayne. Some questions from me, Minister, on council tax reform. Firstly, whether you're able to provide assurances that no local authority in Wales would see a reduction in its overall budget as a result of council tax reform, and to what extent that might involve changes to the funding formula. 

So, I've met, again, on this issue, with local government leaders several times, and obviously this is one their areas of particular interest. I think there are two things to say here. First of all, overall, this is not a revenue-raising exercise, and I think that's important for the public to understand as well, because this is really about making council tax fairer within the envelope that exists, rather than looking to raise additional revenue. But then we do also recognise that a fairer and more progressive council tax will obviously mean that there will be changes in the tax base and, obviously, therefore in terms of the tax-raising ability of individual local authority areas. However, we've got the long-standing principle of a needs-based funding distribution, and that means that we propose that the RSG will be adjusted accordingly, and WLGA and local government collectively support that aim as well.

So, we'll consider any adjustments to the formula through the existing formal partnership arrangements that we have, including the finance sub-group of the Partnership Council for Wales and, obviously, the distribution sub-group, which is the place where the formula is considered in detail. We can't move forward on that work until we know the outcome of the property valuation work, because that will let us understand the changes in the tax base. So, it'll be phase 2 of our consultation that will delve into that in greater depth. But I hope that we are able to provide local authorities with the kind of reassurance that they need, and they're supportive of the approach we've taking. 

Okay, Minister. In terms of the initial reforms and then the longer term possibilities, could you say a little bit about reform based on land value or income, and to what extent they are still very significant in Welsh Government thinking, even if it is in the longer term?

The consultation, which is currently open at the moment, sets out our shorter term ambitions in terms of the revaluation and making council tax fairer through that, but then also in parallel by looking at the system of exemptions, premiums and discounts that we have, and also looking at the council tax reduction scheme as well—so, essentially, making the system that we have much more up to date and much fairer. So, that's our short-term ambition to complete over the course of this Senedd term. But I don't want to underplay how important that is going to be in terms of making council tax fairer; I think that's going to be quite significant. But then, at the same time, we have considered what longer term changes might look like. Cardiff University did some research for us considering a locally raised income tax. That would be, essentially, a local income tax. That research really showed that there were some quite significant downsides to that in terms of the complexity of it, and the fact that there were quite some significant avoidance risks and so on. So, that's not something that we decided that we would pursue any further, not least because there could be some disagreement with the UK Government in terms of our power to be able to undertake that kind of work. But it wasn't an attractive option to us, having looked at the research in that space. But Bangor University's work, I think, is quite instructive in terms of helping us consider the potential for a land value tax in future, so we've committed to continue exploring that idea in parallel with the immediate changes that we're making, and so be we'll doing that over the course of this Senedd term as well. I think that's got interesting potential applications, both on the side of non-domestic rates as well as council tax. So it's an area of active interest, and, of course, if committee were to look into this in depth, we'd be keen to follow your work closely as well.

Okay, Minister. I think we’re always grateful for ministerial suggestions in terms of our work programme—thank you very much. A final question from me on council tax. The Institute for Fiscal Studies report looking at the discount schemes and the single person’s discount—they were quite critical of that, weren’t they? In fact, they said that it encourages an inefficient use of housing stock. I wonder if you could tell the committee your view on that criticism, that concern, and also more widely in terms of potential reforms to the council tax reduction scheme and other support schemes.

Yes, we were pleased to commission the work from the IFS, and of course some of that work did reflect the views of the IFS on some of the various different discounts, exemptions and premiums, and so on. But I really want to be clear, because I know there has been some misunderstanding of this in some parts of the media, that the consultation doesn’t propose removing the so-called single person discount, or any of the discounts that we currently have in place. What the consultation does is just at this point propose a review of the wide range of existing discounts and exemptions to improve and modernise the system. But of course it’s been three decades now since we’ve had this system, so I think that that review is timely now.

It's too early to say, then, what changes might follow as a result of that review, but I just think it’s the right time to review all of those discounts and exemptions. So, we’re not proposing to remove any one or any block of them; we’re just reviewing at the moment. More detailed proposals will obviously be part of a further consultation. So, just to provide a bit of clarity on that, because I know that some people have read articles that were proposing removing the single person discount at this point.

We’ve also got work going on in terms of the council tax reduction scheme, and, again, that’s about reviewing it to make sure that it’s fit for purpose for the current situation. We know that, of course, the impact of universal credit has had implications for the council tax reduction scheme in terms of people’s ability to receive that support, so we just need to make sure that the support that we do provide is up to date and modern, fit for purpose. The review of the exemptions, and so on, is part of it, the review of the council tax reduction scheme is part of it, but the aim of all of this is to make council tax modern and fairer.

Okay, thank you for that, Minister. Sam Rowlands.

Thank you, Chairman, and good morning, Minister and officials. Thank you for your time this morning. I’m just going to move on to, I’m sure, you’re favourite topic—corporate joint committees. I’m just wondering, perhaps, if you could give us an assessment as to how things are going with the corporate joint committees, and perhaps some of your expectations on how they might develop in the near future.

I had the pleasure of meeting all of the chairs and vice-chairs of each of the CJCs over the summer to discuss their reflections on how things have gone so far, and also to discuss their progress and their ambitions for the future. At the moment, we’re very much making sure that each of these regions now has considered how their CJC will operate, and that includes having robust plans in place for the scrutiny arrangements, for example, and also the sub-committee structures. So, I think that work is going on very well and progressing in that sense. And I think that the next steps then will be CJCs moving on to exercise the significant powers and responsibilities that they have in terms in terms of regional planning, and also the economic development and transport side of things as well. So, I think that that will be the next step, really—seeing how CJCs use the structures to deliver, really, for their communities, and we're keen to support them in any way doing that.

There have been some things that we've needed to resolve—issues around value added tax, for example, which came to the fore early on in the establishment of CJCs. So, we're having discussions with Treasury. We've been able to resolve the VAT issue. The UK Government has to lay legislation. It's been delayed, obviously, because of the death of the Queen, but 1 March is the date now for that being fully resolved. There are some outstanding issues around corporation tax, for example, that we have yet to resolve, but we're positive that those discussions will resolve well as well. Shall I check with Claire if there's an update on any of them? 

Certainly, Minister. We've got a small number, really, given the scale of the regulatory framework, of some outstanding operational issues that we're working through to resolve, but we're really heartened that the VAT issue was resolved and will be in place for the next financial year, giving them the clarity to plan for the next financial year. And we work very closely with the CJC leadership and also the officers to work through the operational opportunities, as well as challenges. 

Can I just ask on that point, then, is that also referring to incorporating the growth deals within the CJCs, or have all the issues around incorporating growth deals into CJCs been resolved now? 

I think all of the CJCs have decided to align their work with the city and growth deals. That seems to make sense, and that seems to be working well as far as we can tell. 

But has it actually happened yet, sorry? 

It's for each CJC to choose to do that, and we know that all four of them are looking at, but they are working through transitional arrangements around when would be the best time to do it, how to approach it. Again, it's local discretion as to how they approach that, but we're really keen to work alongside them and support them in doing that. 

Okay. So, it hasn't actually happened yet. It's something that they're planning to do.

Yes, it's part of their planning, heading towards the next financial year for the earliest one. 

Okay, thank you. And just to take this a little bit further, I just wonder, if there are future growth deals that perhaps are geographically different to the existing growth deals, would there be an appetite or an expectation for new corporate joint committees to be established to incorporate those city and growth deals, do you think? 

I don't think there are any plans or discussions under way for further growth deals. So, I think we would cross that bridge when we came to it. I don't think that's a live area of discussion at the moment. 

But I would add that there's deliberate flexibility within the CJC structure for them to work at a sub-CJC level, but also cross-CJC. There's no reason why they couldn't approach a different model down the line without needing to necessarily create a new CJC to take it forward. 

Yes, okay.

Because it's still early days, isn't it, for the growth deals, and so on. Obviously, we'll want to make them a success, really, and learn lessons as well.

Yes, absolutely. Thanks. 

Sam, just before you go on, I think Carolyn wanted to come in on this point. Carolyn. 

Just on that point, actually, there is the Mersey Dee Alliance across the border as well, and if a CJC or JC equivalent could be applied to that area, maybe cross-border for the future to align with the Mersey Dee Alliance cross-border working, especially if the levelling up—what are they called?— zones go ahead—

The investment zones. 

Investment zones—that's the word. If the investment zones go ahead—just a thought on that. Also, have things moved on from them being run by lead authorities taking the lead on CJCs for administration? Is that what's going to happen now, or have officers and chief executives been appointed separately, because I remember that being a bit of a sticking issue before? 

So, in terms of the Mersey Dee Alliance, certainly there's an expectation they can work across border as well from Wales, so we do expect the north Wales CJC—and I know that they're thinking about how they work with the Mersey Dee Alliance and other bodies—. So, we're looking to explore how that relationship unfolds. 

In terms of the staffing, it's a deliberately flexible model for staffing, so they can employ staff directly. They can also second staffing and they can have staff on loan—so, quite a flexible staffing model. At the moment, they've all appointed chief executives and senior officers. At the moment, those are drawn from constituent councils; they've chosen to second them in for that purpose, particularly during this fledgling period. Down the line, they may choose to directly employ, and one of the issues we're looking to resolve with the outstanding technical issues is to prove beyond doubt that they're part of the pension scheme, so that they'll be able to employ staff directly and with confidence.

Okay, Sam?

Thank you, Chair, but if I may just finish off with a few points. Thanks for those responses. In terms of regional partnership, I noted in your evidence, Minister, that you submitted, that you shared that you're working with the designated Member from the co-operation agreement,

'to carry out a comprehensive review of activity to rationalise regional partnership arrangements with the strategic partnerships themselves.'

I'm just wondering how that may differ from the review that took place a couple of years ago in 2020, and what your expectations are with that.

Yes. I think it just builds on the review that took place previously. I know that that came forward with 11 recommendations, but they were clear, I think, in those recommendations, that this is a space that should be left to the regional partners themselves to lead on, and we want to support that kind of approach. Another of its recommendations, though, was for the Partnership Council for Wales to periodically review the partnership landscape, to consider whether, when and where activity might be required to support local action. So, as part of the co-operation agreement, we've set up a series of meetings with chairs of regional partnership arrangements, in the first instance, to understand their perspectives, how things are working, what are the barriers to better regional working and so on. So, that's the kind of first step, and then, once we've gathered that evidence, then we'll consider what activity might need to progress and support regional partnership arrangements. But, at the moment, in terms of the co-operation agreement, it's about having those discussions with the chairs to get their reflections on what could be improved, and so on. Because I do recognise that things are very different in different areas across Wales.

And just again on this point around reviewing and potentially, perhaps, reorganising some of these partnership arrangements, I noticed your colleague Alun Davies, over the weekend, commented that,

'it is also essential that local government delivers reform and reorganisation. Much promised. Never delivered.'

I just wonder if you share those sentiments at all.

I think that Alun Davies's views on local government reorganisation and reform are well known, but we've got a really strong programme of work now that we're undertaking with local government, in the sense of looking to the CJCs to drive forward a lot of that regional working. I think that that will be important. Obviously, it doesn't preclude local government from reorganising, because the options are still there for local government to make the case, if they would like to, for example, merge—that kind of option does remain. But, for the moment, the focus, really, I think, is best placed on making the current arrangements work, and also making CJCs work, because it's very early days for them, and I think that supporting them with their ambitions is going to be really important. So, we're just in that space, really, of maintaining the work that is ongoing, rather than looking to go back to the drawing board again.

Lovely. Thanks, Chair.

Okay. Thank you, Sam. Joel James.

Thank you, Chair. Just before I start, I'd just like to declare, for the record, that I'm still a community councillor, and I'm one of the councillors who was elected unopposed, which is mentioned in the report, so I thought I'd best come clean with that, which was great for me, but probably not great for democracy, I imagine.

Thanks ever so much for coming today, Minister. I just wanted to pick your brains. It was something that Sam mentioned there, about a former colleague of ours on the committee, Alun Davies. When he was Cabinet Secretary, he published the independent review panel on community and town councils in 2018, and I was just wondering what sort of steps have been taken since that review, by the Welsh Government, since 2018, basically.

So, after my last appearance at this committee, I sent an update to committee on the progress that we'd made in that space. But just to kind of build on that, really, I can confirm that several things have now come into force since 5 May, as a result of the Local Government and Elections (Wales) Act 2021. For example, they now have a general power of competence, which I think is important in terms of allowing them to be more ambitious in terms of the kinds of things that they do for their local communities. And it also placed on town and community councils the duty to report to their constituents and to their local residents on an annual basis. Again, that's about providing greater transparency and understanding about the council's work, so, councils should now be looking to publish their annual reports as soon as is practically possible.

And also, there is, of course, a new duty to prepare and publish training plans for councillors and clerks as well—sorry, training for the councillors. And we also provide bursaries for training for clerks to try and make sure that people serving on the councils have the skills that they need and the support that they need to develop additional skills to support their communities as well. So, we're looking to councils, really, to be competent in terms of ensuring that they have a basic introduction for councillors, because stepping into the role of a town or community councillor is really important, but it might be something that is completely new to people and might need some support to get into the role. We shouldn't underestimate, really, the kind of barriers that there are for people putting themselves forwards to become town and community councillors. So, if they know that there is support for them to get into that role, I think that that will help, potentially, make it more attractive. 

Obviously, we want there to be a code of conduct in place and good financial management and governance within those town and community councils as well. So, those are all areas that I think we've been making good progress on since the independent review and, as a result, in many cases, of the legislation that was introduced as well. And, obviously, we continue to work really closely with One Voice Wales. I think that they do great work supporting the sector as well. I do meet with them and have the opportunity to hear directly then from them what they're hearing in terms of the sector's main priorities and challenges.

Thank you, Minister. And with regard to that, I know that one of your predecessors—I think it was Julie James—she mentioned that there was a lot in the review panel that required further thought, I think, were her words—yes, 'further thought'. And I was just wondering if you could highlight what issues they were and what's been done to address that then.

Yes. I think there are some other areas where we have yet to resolve what the way forward might be in response to some of the issues raised in the report. So, there were questions in the report, really, about defining place-based services. So, is there a benefit in defining the services that should be delivered by town and community councils, or should town and community councils have that flexibility to decide what's right for them locally? So, One Voice Wales and the WLGA are taking forward that work together; they haven't come to conclusions on that. But I think that that was quite a key area, really, which required some further thought.

The other was around the requirement for all clerks to be qualified. So, our approach thus far has been to promote that voluntary approach, but then also to enable the qualification by providing bursaries for clerks as well. So, that kind of incentivises the clerks to take up the qualification. So, there are different elements, really, that have required further thought. Some have not yet been resolved. I mentioned the place-based services and another being this issue about whether councillors should be able to sit on both community and county councils, so dual-hatted councillors. That, again, is an issue that I think has yet to be resolved. I don't think, at this point, that it would require us to introduce legislation to prevent it, but there's some work going on, really, engaging with the sector to find out a bit more about the views there.

Perfect. Thank you, Minister, for that. Just to touch upon that then, because I know that I've asked questions to you in the Chamber before about some of the concerns that I have, in essence, of—. I don't know if it's shown elsewhere, but in my region, we've got a number of town and community council clerks who are then sitting party councillors on neighbouring authorities. And in some of them, one of them was a cabinet member as well, and I'm concerned there about the perception of that, then, in terms of wanting to create an open democracy. Do you recognise that as an issue—that there are too many people within the political bubble filling up these spaces? As you've highlighted before, there is a concern of trying to get good people to fill these roles of clerks and chief financial officers as well, really, and just then to have a cabinet member from the local authority that's above it as the clerk, I think that's quite—I don't want to say dangerous, but it gives people that thought that there's a politicisation of community councils. I was just wondering what your thoughts were on that.

I think that we've exchanged some correspondence on this issue in the past, as well. The role of clerk is obviously a non-political role and you'd expect that whoever was in that role to undertake that role in a non-political way, but then, if there were concerns about the way in which a clerk was undertaking the role, for those concerns to be raised through the proper processes. But I'll check again with Claire if she has anything further on this.

It's not something that has been raised with us certainly recently or regularly, but we can certainly go away and have another look at how common that is as a position. But as you say, Minister, there would be processes in place for clerks and for management anyway and if there was any sense that they were performing inappropriately, there would be mechanisms in place for that to be managed by the council itself.

But I'll be honest, there is a concern with regard to my interaction with these community councils, knowing that I used to sit on the council with them, and there were quite a number of them actually, which was quite alarming to me. Another authority—. He was a community councillor on another community council, he was a county borough councillor and then a clerk of the community council. And I just think that when we're trying to encourage people to stand, that raises alarm bells for me, really. 

But if I can just touch upon the support that is offered to clerks, then, and it's another issue that I've raised in that, more often than not, they are left to their own devices, to an extent. Obviously, they can seek advice from Once Voice Wales or from the local authority that's above them, but what sort of protections are in place then to protect staff from—? And I've seen it before, I've witnessed this on the community council, where people are basically being bullied and intimidated because, if it's a member of staff, they can then follow the various grievance processes and everything, but the clerk, they are at the top and there's a lot of pressure put on them to basically do what they're told by community councillors or whatever, which isn't really how a community council should be run, per se. And I just wanted to know what sort of protection and help can be offered to them, because from my own experience, the clerk that we had—there was no help really. We got involved with the legal officer in the council, there was nothing that could be done; the ombudsman, we contacted several times, but nothing could be done. But thankfully, these councillors are no longer on the community council, but that's because they decided not to stand, rather than any action that could be taken to protect staff. And I was just wondering if that's something that could be looked into.

So, I'll ask Claire to come in again on this, but I just would highlight some of the recent work that we're doing that will hopefully prevent difficult situations arising, one being the updated 'The good councillor's guide'. And we developed that collaboratively with support from the Society of Local Council Clerks and also with advice from Audit Wales. So, hopefully, that will help in terms of giving councillors the kind of clear expectations, really, of behaviours and so on. And we've also co-developed a finance and governance toolkit—again, One Voice Wales supported us in that work—to give clerks the kind of confidence that their running of the council is what we would want it to be, and so on.

We've also, as I mentioned earlier, introduced the bursaries for community council clerks so that they can undertake the certificate in local council administration. Initially, we provided funding just for the registration, but now we've provided it recently to cover the costs of the full course. And I think that those kinds of efforts that we provide to try and help professionalise, if you like, the work of the clerks should hopefully give them good standing amongst the councillors on the community councils themselves. But obviously, there's no place for bullying or intimidation in any setting, including in town and community councils. So, obviously, what you've described is concerning, and I'll just ask Claire to come in on this as well.

Yes. So, as I say, we're certainly always looking to try to improve the culture more generally, and to strengthen that. So, I think that what I would add would be that we've put targeted funding into code of conduct training this year, and have seen a significant uptake in code of conduct training. We're also working very closely with monitoring officers from local authorities and One Voice Wales as to how do we ensure that councils are drawing on that code of conduct training, so that more generally the conduct is improved. Finally, we've been helping the ombudsman's office and the sector bodies to put together a guide for them in relation to officer complaints, and that should be available later this year.

Thank you. I suppose I have just one final question. Obviously, I mentioned that I was elected unopposed. What steps are the Welsh Government—[Interruption.] Thank you, Sam. What steps are the Welsh Government taking to try and encourage more people to stand at community and town councils? Because I think that they're brilliant organisations that do a lot of good for the community, and I think their praises should be sung a bit more. I was just wondering what, as I say, steps the Welsh Government is looking at to try and get more people to take an interest and get more involved, I suppose. Thank you.

It is concerning, the lack of interest and the lack of a variety of people who put themselves forward. Over 60 per cent of seats were uncontested, so you weren't alone in the last election by any means, and actually 15 per cent of the seats were actually left unfilled, but then obviously you go on to co-option or further elections. Indeed, 29 councils were inquorate after the last election, although I understand that's no longer the case now and that's been resolved. I think it does say to us that we need to do more to support people to understand the amazing role that town and community councils can have in their local communities, and also to see themselves as potentially being someone who can play a part in that.

So, we've done some work with One Voice Wales. We've developed some promotional videos, setting out how councillors can make a difference. We've also piloted the access to elected office fund, and that's supporting disabled candidates who were seeking elections to the local government seats in 2022, and we've been evaluating that with Disability Wales. And, of course, we've legislated to make it easier for town and community councillors to attend meetings remotely, so requiring that physical assistance and removing councillors who didn't attend for six months did appear to be a barrier to many candidates, especially those who have got caring responsibilities, for example, alongside being a councillor. So, looking to remove those kinds of barriers and make it just practically easier for people to be a councillor, I think is important. But we definitely have to do more in this area.

We are creating a working group, in discussion with One Voice Wales, to identify and tackle the barriers to engagement and representation. Hopefully, I'm going to say a bit more about that in the coming weeks. We're working on the terms of reference at the moment, but we want that particular work to be focused and pacey, rather than something that takes a long time to come to a conclusion.

Okay. Thank you, Minister. Thank you, Joel. Sam.

Thank you, Chair. Can I just ask a couple more points?

Yes.

I'm conscious that we've a little bit more time. I just want to build on Councillor Joel's point—Joel's point—on the clerks being elected members elsewhere as well, and you mentioned that, I suppose, it's a non-political role as a clerk. Do you think it's possible, therefore, for a politician to carry out a non-political role?

Yes, I would imagine that it would be possible, because—. It depends which role you're sitting in at that time. So, I think that you can undertake—. Politicians can undertake all kinds of roles. Councillors, particularly, have other roles in life. They may be teachers, vicars—all kinds of different things. So, I think it is possible to have an unpolitical role whilst also being a town or community councillor at the same time.

All right. Thanks. And then, just briefly, Chair, if I may, it's been raised with me a number of times some of the challenges that councillors face around hybrid and remote meetings—clearly, community and town councils, the challenge in terms of resource and scale, but also some local authorities as well. I would certainly argue, and I think it's fair to agree, that good scrutiny often takes place better face to face—that's why we appreciate you coming here today, Minister—and therefore, with good scrutiny, you could hope for better performance. I know some local authorities, their scrutiny committees, they're insistent they all take place over Zoom. At the Vale of Glamorgan Council, for example, their scrutiny committees are not meeting face to face, and my understanding is that officers are refusing to create the capacity to allow that to take place. They've recently held their first full council meeting hybrid, just in the last week or so, and there were many issues—it dropping out, translation not working properly. So, your assessment as to whether we're getting that balance right between, yes, remote access, access for all, the public able to access that more easily, versus proper, healthy scrutiny taking place in local authorities, and how that's working at the moment. 

I definitely think it is possible to have proper scrutiny undertaken in a virtual session. Having been on the receiving end of some of it on many occasions, I can tell you that it is genuine scrutiny. So, I do think that you can have proper scrutiny by remote methods, but, ultimately, I think it's for councils to decide for themselves which of the systems works best. I think that we're doing some work with—. Or the chief digital officer's been leading some work on this, looking specifically at what additional support might be needed, particularly in the town and community council sector. That's something that we're keen to continue with, because of course this is new for everyone, but particularly new, I think, for town and community councils. 

One more point, just briefly on that same issue, Chair, if I may. 

Yes, sure. 

I absolutely agree it's down to local authorities to manage that effectively, but I guess that, as the Minister for local government, you need to be satisfied that it is working effectively and it's always appropriate, in terms of the measures that they're using. So, do you think you'll be taking a review of hybrid working at any point in the next few months? Or is that something that I could ask that you think about doing?

I think that, because the legislation's only recently enacted the ability to work in this hybrid way, particularly with town and community councils, with that requirement that people can hear and be heard for the meetings—. I think that, in due course, we'll want to get reflections on how it's working, and, if people want to let us know what their initial experiences have been, obviously we'll be keen to hear what they are. But, if you've got some specific concerns, perhaps you could share them with me outside the meeting as well.

Thank you. Thank you, Chair. 

Before I bring in Carolyn Thomas as well, Minister, could I just ask about the digital democracy fund, which we no longer have? Has that left a gap in terms of these issues that should be filled?

We've got the chief digital officer now for local government, and that's been an important role in terms of, in the first instance, engaging with local government to understand what their digital needs are, particularly for the transformation of public services. So, those discussions, I know, have been useful, and we're thinking now about how that particular role might best be developed going forward. It was seen as an enabling role, really, to bring together local government, bring together experiences, and identify shared problems where you might have shared digital solutions. So, that work was funded by the Welsh Government, and our funding went, then, through the chief digital officer's office rather than through this specific fund. I would also agree to fund a post to support town and community councils, but, on reflection and in discussion with One Voice Wales, we decided that perhaps that role might best be, in the first instance, delivered through the chief digital officer's office as well. So, I think that we're at the start of a journey in this sense, but perhaps I'll send you some further information on that as well. 

That would be very useful, Minister, thank you. Carolyn.

Thank you. When I was a county councillor I was also on two community councils, and the clerk was also called Carolyn Thomas, but it was another Carolyn Thomas—they always thought it was the same one. But I think, with me being on both the county and community council—I know you said you're looking at it, whether you can sit on both, but that liaison between the two, the communication, that line of communication, so that I was able to attend community council and explain what was going on at county council level, was really important. And also for me to take things back for them at county council level, because I think, with the funding cuts over the last 10 years to councils, fewer officers answering calls, the lines of communication have become more difficult with county councils, I think, for people accessing them. Everything's e-mail or online in trying to get those answers. If you're looking in the future not to allow somebody to be a county and community councillor, I think maybe we should be saying they need to attend their community council meetings every so often as part of that legislation, just for that line of communication.  

Yes, I think there are pros and cons in both senses, really, in terms of that kind of dual-hatted approach. It's an area for future consideration, but it's certainly not something that we would be looking to be legislating on at the moment. 

Okay, thank you very much, and, finally, Jayne Bryant. Jayne. 

Diolch, Cadeirydd. Thank you, Minister, and I'll be keen to see some of the progress that's been made on encouraging more community and town councillors; it sounds really interesting. In terms of legislation, perhaps you could just set out some of the key provisions you think are likely to be included within a proposed local government finance Bill.

Yes. So, we've got two consultations out at the moment, and through those I think you get a really good idea of what you'll see in a forthcoming local government finance Bill, having considered, of course, the responses to the consultation. So, we've got the fairer council tax phase 1 consultation at the moment, and the main element of the work, really, reflected in the proposed Bill would be to put in place statutory frequent cycles of revaluation, and that would be rolling revaluation to the future. I think that that would provide clarity for taxpayers and transparency and so on, and obviously would make sure that our council tax system is up to date. That would require primary legislation, and that work is, obviously, being taken forward in partnership with local government, the Valuation Office Agency, the Valuation Tribunal for Wales and other important partners as well. 

Obviously, there's another area where we would like to gain greater flexibility through the Bill, and that's in the space of the exemptions and the discounts for council tax. Again, this sits within an existing legal framework, and that was constructed in 1992, so it's very out of date at the moment. So, those are two key areas on the council tax side where you would see changes introduced through a local government finance Bill. Much of the rest of the reform programme, actually, including the rebanding exercise that might take place, for example, and administrative changes, could be taken forward without primary legislation. So, those could be delivered within our existing powers to lay statutory instruments and, obviously, the Senedd will have the opportunity to scrutinise that in due course as well.

Those are the main items that you would see relating to the council tax proposals in terms of legislation, and then the other consultation we have out at the moment relates to non-domestic rates reform. That builds on the statement that I made on 29 March to the Senedd, and the proposed changes in the consultation aim to help align the non-domestic rates system with our wider Government goals. And essentially, you'd be looking at powers that would give us the chance to establish more frequent revaluations, powers to vary the multiplier and adapt the reliefs and exemptions that would apply to rate payers in Wales. Those are the kinds of things that you would see in a future Bill, following the consideration of the consultation responses. 

Thank you, Minister. Okay, Jayne? Thank you very much.

Diolch, Cadeirydd. 

Okay. Thank you very much, Minister, and your officials for coming to give evidence to committee today. You will be sent a transcript to check for factual accuracy in the usual way. Diolch yn fawr. 

Diolch. 

Okay. The next item on our agenda today, then, item 4, is papers to note. We have paper 3, a response from Welsh Government to our report on second homes in Wales. Paper 4, a letter from the Counsel General and Minister for the Constitution on local government electoral pilots. Paper 5, a joint letter from Community Housing Cymru, the Chartered Institute of Housing Cymru and Housing Leadership Cymru in relation to the Welsh quality housing standard, which was referred to earlier in our scrutiny session. Paper 6 is a letter from the Minister for Social Justice in relation to housing Ukrainian refugees. Paper 7 is a letter from the Public Services Ombudsman for Wales in relation to complaint-handling practices of local authorities in Wales. Paper 8, further information from the Minister for Climate Change on community assets, following her earlier evidence session on the subject. And paper 9, a submission from Dr Sarah Nason, from Bangor University, relating to community assets. We will be returning to some of these matters later on in our agenda today. Are Members content to note the—? Mabon.

On that, Mabon, it's actually the debate in Plenary next week, so I think that will be a good opportunity to raise those concerns and hopefully get a further response. Is that okay? Okay. Are Members content to note the papers, in general? Yes. Diolch yn fawr.

Item 5, then, is a motion under Standing Order 17.42 to resolve to exclude the public from the remainder of today's meeting. Is committee content to do so? Yes. Thank you very much. We will, then, move to private session.